SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number 0-24240
RIDGEWOOD ELECTRIC POWER TRUST I
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-3105824
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
c/o Ridgewood Power LLC, 947 Linwood Avenue,
Ridgewood, New Jersey 07450-2939
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (201) 447-9000
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Shares of Beneficial Interest(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ X ]
There is no market for the Shares. The aggregate capital contributions made
for the Registrant's voting Shares held by non-affiliates of the Registrant at
March 30, 2000 was $10,550,000.
Exhibit index is at page ____.
<PAGE>
PART I
Item 1. Business.
Forward-looking statement advisory
This Annual Report on Form 10-K, as with some other statements made by the
Trust from time to time, has forward-looking statements. These statements
discuss business trends and other matters relating to the Trust's future results
and the business climate and are found, among other places, at Items
1(c)(2)(iv), 1(c)(3), 1(c)(4), 1(c)(6)(ii) and 7. In order to make these
statements, the Trust has had to make assumptions as to the future. It has also
had to make estimates in some cases about events that have already happened, and
to rely on data that may be found to be inaccurate at a later time. Because
these forward-looking statements are based on assumptions, estimates and
changeable data, and because any attempt to predict the future is subject to
other errors, what happens to the Trust in the future may be materially
different from the Trust's statements here.
The Trust therefore warns readers of this document that they should not
rely on these forward-looking statements without considering all of the things
that could make them inaccurate. The Trust's other filings with the Securities
and Exchange Commission and its Confidential Memorandum discuss many (but not
all) of the risks and uncertainties that might affect these forward-looking
statements.
Some of these are changes in political and economic conditions, federal or
state regulatory structures, government taxation, spending and budgetary
policies, government mandates, demand for electricity and thermal energy, the
ability of customers to pay for energy received, supplies of fuel and prices of
fuels, operational status of plant, mechanical breakdowns, availability of labor
and the willingness of electric utilities to perform existing power purchase
agreements in good faith. Some of the cautionary factors that readers should
consider are described below at Item 1(c)(4) - Trends in the Electric Utility
and Independent Power Industries.
By making these statements now, the Trust is not making any commitment to revise
these forward-looking statements to reflect events that happen after the date of
this document or to reflect unanticipated future events.
(a) General Development of Business.
Ridgewood Electric Power Trust I (the "Trust") was organized as a Delaware
business trust on May 9, 1994. It was organized to acquire all of the assets of
and to carry on the business of Ridgewood Energy Electric Power, L.P. (the
"Partnership"). The Partnership was a Delaware limited partnership which was
organized in March 1991 to participate in the development, construction and
operation of independent power generating facilities ("Projects"). On June 15,
1994, with the approval of the partners, the Partnership was combined into the
Trust, which acquired all of the Partnership's assets and which became liable
for all of the Partnership's obligations. In exchange for their interests in the
Partnership, the investors in the Partnership received an equivalent number of
Investor Shares in the Trust. The Partnership has been dissolved.
The predecessor Partnership raised $10.5 million in a single private
offering conducted in 1991 and early 1992. Substantially all of those funds were
applied prior to 1995 to the purchase of interests in the three Projects
described below, to funding business ventures that were unsuccessful and to
paying the fees and expenses of the Partnership's offering and the Partnership.
The Trust made an election to be treated as a "business development
company" under the Investment Company Act of 1940, as amended (the "1940 Act").
On May 26, 1994 the Trust notified the Securities and Exchange Commission of
that election and registered its shares of beneficial interest (the "Investor
Shares") under the Securities Exchange Act of 1934, as amended (the "1934 Act").
On June 25, 1994 the election and registration became effective. The Trust
currently has 240 holders of record of Investor Shares.
The Trust is organized similarly to a limited partnership. Ridgewood Power
LLC (the "Managing Shareholder"), a Delaware corporation, is the Managing
Shareholder of the Trust. For information about the merger of the prior Managing
Shareholder, Ridgewood Power Corporation, into Ridgewood Power LLC, see Item
10(b) - Directors and Executive Officers of the Registrant - Managing
Shareholder.
In general, the Managing Shareholder has the powers of a general partner of
a limited partnership. It has complete control of the day to day operation of
the Trust and as to most acquisitions. The Managing Shareholder is not regularly
elected by the owners of the Investor Shares (the "Investors"). The Managing
Shareholder and the Independent Trustees of the Trust meet together and take the
actions that the 1940 Act requires a board of directors to take for a business
development company. The Board of the Trust also provides general supervision
and review of the Managing Shareholder but does not have the power to take
action on its own. The Independent Trustees do not have any management or
administrative powers over the Trust or its property other than as expressly
authorized or required by the Declaration of Trust of the Trust (the
"Declaration") or the 1940 Act.
Ridgewood Energy Holding Corporation ("Ridgewood Holding"), a Delaware
corporation, is the Corporate Trustee of the Trust. The Corporate Trustee acts
on the instructions of the Managing Shareholder and is not authorized to take
independent discretionary action on behalf of the Trust. See Item 10. -
Directors and Executive Officers of the Registrant below for a further
description of the management of the Trust.
The following chart summarizes some of these relationships.
<PAGE>
Ridgewood Electric Power Trust I and certain affiliates
(some entities and relationships omitted)
Robert E. Swanson Family trusts
x x (Mr. Swanson has
Sole manager x x sole voting and
Chief executive officer x x investment power)
Owner of 46% of equity x x Owners of 54% of equity
_________________X__________________X______________________________
x x x x x x
x x x x x x
x x x x x x
Ridgewood Ridgewood Power Ridgewood Ridgewood Ridgewood Ridgewood
Securities Management LLC Power LLC Energy Power VI Capital
Corporation Holding LLC Management
Corporation LLC
Operates power Corporate Manager
Placement plants for five Managing Trustee Co-Managing of two
agent power trusts Shareholder for all Shareholder venture
("Ridgewood ("RPMCo") of six six trusts (dormant) capital
Securities") trusts x of the funds &
("Ridgewood x Growth Fund marketing
Power") x ("Power VI Co") affiliate
x x x ("Ridgewood
x x x Capital")
x x x x
______________________________x____________x_____________ x x
x x x x x x x x
x x x x x x x x
Ridgewood Ridgewood Ridgewood Ridgewood Ridgewood The Ridgewood x
Electric Electric Electric Electric Electric Power Growth x
Power Trust Power Trust Power Trust Power Trust Power Trust Fund x
I II III IV V (the x
(the "Trust") ("Power II") ("Power ("Power IV") ("Power V") " Growth x
III") Fund") x
x
________________________________X__
x x
x x
Ridgewood Capital Ridgewood Capital
Venture Partners Venture Partners II
(the "Venture Capital Funds")
(b) Financial Information about Industry Segments.
The Trust operates in only one industry segment: independent electric power
generation.
(c) Narrative Description of Business.
(1) General Description.
The Trust was formed to participate in the development, construction and
operation of independent electric power projects that generate electricity for
sale to utilities and other users. The Trust owns the Olinda Project, a five
megawatt capacity electric generating plant fueled by methane gas from a local
landfill in Brea, Orange County, California. It also owns a preferred limited
partnership interest in the Stillwater Project, a 3.5 megawatt hydroelectric
facility located on the Hudson River north of Albany, New York. In 1997, the
Trust sold its South Boston Project (previously designated as the "Lynchburg
Project"), a three megawatt capacity electric generating plant at South Boston,
Virginia that burns waste fuel oil prepared in part by an on-site waste oil
processing facility. It retained a mortgage on the property and the right to 2%
of the gross revenues, if any, earned by that Project in the future. During
1999, the Trust wrote-off its investment in the mortgage.
These Projects are Qualifying Facilities, which are generally exempt
from federal and state regulations which apply to investor-owned electric
utilities. As described below, under current law, utilities are required to
purchase electricity generated by Qualifying Facilities under terms generally
favorable to the Qualifying Facilities. This essentially means that the Projects
are not subject to competition for the lives of their current long-term power
contracts with the electric utility purchasers ("Power Contracts"). When or if
those Power Contracts end, the Projects will have to sell their output on the
competitive electric power market and there is no assurance that they can do so
at a profit.
In addition, effective August 1999 the Trust, through a subsidiary, bought
two Caterpillar mobile electric generating units having a total output capacity
of 2.35 megawatts. These are rented through an equipment supplier to businesses
needing short-term mobile power and are not Qualifying Facilities.
Historically, producers of electric power in the United States consisted of
regulated utilities and of industrial users that produced electricity to satisfy
their own needs. The independent power industry in the United States was created
by federal legislation passed in response to the energy crises of the 1970s. The
Public Utility Regulatory Policies Act of 1978, as amended ("PURPA"), requires
utilities to purchase electric power from "Qualifying Facilities" (as defined in
PURPA), including "cogeneration facilities" and "small power producers," and
also exempts these Qualifying Facilities from most utility regulatory
requirements. Under PURPA, Projects that are Qualifying Facilities are generally
not subject to federal regulation, including the Public Utility Holding Company
Act of 1935, as amended, and state regulation. Furthermore, PURPA generally
requires electric utilities to purchase electricity produced by Qualifying
Facilities at the utility's avoided cost of producing electricity (i.e., the
incremental costs the utility would otherwise face to generate electricity
itself or purchase electricity from another source).
The utility is not required to enter into a long-term Power Contract
and can buy the output from Qualifying Facilities on a short-term basis at
varying rates set by state regulators. In the past, many utilities chose to
enter into long-term Power Contracts with rates set by contract formula. In many
cases, those contract formula rates are today much higher than competitive
rates. The Olinda and Stillwater Projects have existing long-term Power
Contracts with rates significantly above current competitive rates. As described
below, the long-term Power Contract for the South Boston Project was cancelled
in exchange for a settlement payment.
The electricity produced by each Project is sold to the local electric
utility company under Power Contracts, or is used on site to power equipment.
As discussed below, the Trust is a "business development company" under the
Investment Company Act of 1940. In accounting for its Projects, it treats each
Project as a portfolio investment that is not consolidated with the Trust's
accounts. Accordingly, the revenues and expenses of each Project are not
reflected in the Trust's financial statements and only cash distributions are
included, as revenue, when received. Accordingly, the recognition of revenue
from Projects by the Trust is dependent upon the timing of distributions from
Projects by the Managing Shareholder. As discussed below and at Item 5. Market
for Registrant's Common Equity and Related Stockholder Matters, distributions
from Projects may include both income and capital components.
(2) Projects.
(i) Olinda Project. In October 1994, the Trust purchased for
$3.1 million an equity interest in Brea Power Partners, L.P., a partnership
which owns and operates a 5 megawatt landfill gas-fired electric generating
plant known as Olinda and located in Brea, California (the "Olinda Project"). A
landfill gas plant takes methane and other burnable gases created by the
decomposing of garbage in a landfill and uses them as fuel, converting them to
carbon dioxide, water and some residual waste. Otherwise, those gases would
escape to the atmosphere. Among other problems, methane is a potent "greenhouse
gas" that increases global warming by significantly more than the carbon dioxide
and water vapor produced when it is burned.
The Trust's original limited partnership interest essentially was designed
to allow it to recover its initial investment of $3.1 million and to provide an
internal rate of return of approximately 15% per year, and to yield a small
residual amount thereafter. The limited partnership interest was entitled to 98%
of all profits and losses of the Partnership and of all distributions of cash
flow up to a scheduled amount per year ($726,000 for 1997); thereafter, it was
entitled to 25% of any excess cash available for distribution in that year. When
cumulative distributions to the Trust in respect of the limited partnership
interest, discounted to present value at 1.17% per month, reached $3.1 million
(which was expected to occur no later than 2004), the Trust's annual interest in
profits and losses would be reduced to 5%.
As of January 1, 1997, the owner of the remaining limited partnership
interest in the Partnership was GSF Energy, LLC, an indirect subsidiary of DQE
Corporation. DQE is a holding company for Duquesne Light Company of Pittsburgh,
Pennsylvania. GSF Energy, LLC also owned the general partner of the Partnership,
which had a 1% interest in the Partnership's profits and losses.
On June 1, 1997, the Trust through subsidiaries acquired the general
partnership interest and the limited partnership interest owned by GSF Energy,
LLC for a base price of $3,000,000, and thus acquired the entire beneficial
interest in the Partnership. The parties agreed that the base price was to be
adjusted for operating cash flow generated and cash distributions made by the
Partnership from the effective date of January 1, 1997 through May 31, 1997 and
for the Partnership's current assets at the closing date. The purchase price as
so adjusted was $2,813,000, inclusive of a cash payment of $2,257,000 to the
seller, assumed liabilities of $441,000 and acquisition costs of approximately
$116,000. In the second half of 1997 the Trust invested an additional $661,000
to provide working capital.
Neither GSF Energy, LLC nor DQE Corporation was affiliated with or had any
material relationship with the Trust, its Managing Shareholder or their
affiliates, directors, officers or associates of their directors and officers,
other than their prior relationships with the Partnership and the ongoing
responsibility of the corporate successor to GSF Energy, LLC to operate the gas
collection system as described below. The sales price and the terms of the
acquisition were determined in arm's length negotiations between the Managing
Shareholder of the Trust and representatives of DQE Corporation. The source of
the Trust's funds was cash reserves derived from the previously reported
settlement of litigation with Virginia Electric Power Company relating to the
South Boston Project, described below.
All electricity generated by the Project over and above its own
requirements is sold to Southern California Edison Company under a long-term
power purchase contract which may be terminated by the purchaser no earlier than
the end of 2004 on five years' advance notice. The contract price is the greater
of 5.8 cents per kilowatt-hour or 85% of the utility's avoided cost. Currently,
avoided cost is computed under a formula prescribed by the California Public
Utility Commission consisting of a fixed payment for the plant's capacity and a
payment per unit of energy delivered that is tied to the cost of spot electric
energy on the California Power Exchange. In earlier years, the energy payment
had been tied to the cost of natural gas, the fuel used at the plant. The
Commission did not change the 5.8 cent per kwh floor price, which is
significantly in excess of both the old and new formula prices. The capacity
payments vary seasonally and are significantly higher during the summer peak
season.
The Trust's purchase includes only the electric power generating station
located at the landfill. Ecogas Corporation ("Ecogas"), which is the corporate
successor to GSF Energy, LLC and which is an affiliate of DQE Corporation, has
retained ownership of the landfill gas collection system and the processing
units located outside the Project building and will continue to supply the
Project with landfill gas fuel under an amended gas purchase and supply
agreement. Under that agreement, Ecogas will sell gas to the Project at a price
of approximately $.70 per million British Thermal Units of heat equivalent
(escalating at 3.7% per year) plus an additional fixed payment, effective as of
January 1, 1997, of $12,500 annually (escalated at 3.7% per year). If the gas
supplied is insufficient to operate the generators at assumed levels, the
Partnership may take action to remedy the deficiency. Further, in that instance
Ecogas would be liable to the Partnership for damages of up to $3.1 million on a
cumulative basis. The gas supply agreement expires on the later of December 31,
2004 or the stated term of the power contract. The landfill gas is produced from
a landfill owned by the County of Orange, California, under a gas lease
agreement that expires no earlier than the end of 2004. The County is entitled
to a royalty payable by GSF Energy, Inc.
Congress has created a $3 per barrel of oil equivalent tax credit as an
incentive for burning landfill gas (with numerous exceptions and phase-outs).
The credit currently expires in 2003. The credit can only be obtained, however,
by a seller of landfill gas to an unaffiliated generating facility. Accordingly,
neither the Trust nor its Investors are entitled to any tax credit for landfill
gas. The profitability of the gas collection system to Ecogas and thus possibly
the supply of landfill gas to the Olinda Project is dependent upon whether the
credit continues and whether Ecogas meets the credit's requirements.
The Project is liable to Southern California Edison Company for liquidated
damages of up to $3.8 million if it does not meet defined performance and
availability standards. Further, if the Project is not operating for at least
80% of peak hours (excluding periods of scheduled maintenance and other
exceptions) it may lose a portion or all of its entitlement to capacity payments
from Southern California Edison, which could materially impact the Project's
ability to operate. Therefore, if Ecogas is unable to provide landfill gas for
an extended period of time, the Project would be at risk of losing payments for
energy and capacity, and in the event of a major failure, of incurring
liquidated damages to Southern California Edison.
In spring 1998 Ecogas sustained repeated short-term compressor failures
that interrupted delivery of gas to the Project. Although Ecogas obtained used
replacement compressors, those replacements in turn failed during July and
August 1998, causing a material revenue loss to the Project. The Trust claimed
$389,000 as liquidated damages (which approximates the Trust's actual damages)
under the amended gas purchase and supply agreement in September 1998 and has
offset the claims against the Trust's obligations to Ecogas to pay for delivered
gas. Ecogas has informed the Trust that it is obtaining used replacement
equipment and is in the process of installing that equipment, and since
September 1998 Ecogas has not had any extended failures to deliver gas. The
Trust is monitoring Ecogas's actions to remedy the compressor problems but has
not yet reached a conclusion as to the extent of any risk of supply failures in
the future.
An affiliate of DQE operated the Project under an operations and
maintenance agreement. For the first five months of 1997, the base fees paid
were $1,375,000 and incentive payments totalled an additional $85,000. The
operations and maintenance agreement was terminated in June 1997 and Ridgewood
Power Management LLC, an affiliate of the Trust's Managing Shareholder, operates
the Project. It is reimbursed by the Trust for its actual costs incurred and
allocable overhead expenses but will not otherwise be compensated.
Distributions from the Olinda Project to the Trust in 1999 totalled
$1,791,000. Until June 1, 1997, substantially all of the Trust's rights to
distributions from its limited partnership interest in the Olinda Project would
terminate at the end of 2004. Therefore, until June 1, 1997 the Trust treated
distributions in respect of that limited partnership interest in excess of the
15% annual return target as returns of capital. Beginning June 1, 1997, the
Trust beneficially owns the entire interest in the Project, and all
distributions are being treated as revenues to the Trust.
The power purchase contract for the Olinda Project expires at the end of
2004. Current spot electricity rates and contract prices are substantially lower
than the 5.8 cent per kilowatt-hour floor rate under the existing agreement and
are not currently at a level that would allow the Olinda Project to be
profitable. Therefore, unless electricity rates increase substantially,
operating costs can be substantially reduced or a public subsidy or other
incentive for landfill gas use is available, it is unlikely that the Olinda
Project will be able to operate profitably after 2004. Further, the federal tax
credit for production of landfill gas is scheduled to expire in 2003. and if the
credit is not extended or another tax or subsidy incentive is not substituted
for it, Ecogas may not be able to operate the collection system under the
existing arrangements and the cost of landfill gas fuel to the Project may
increase. Finally, the existing landfill gas lease with Orange County,
California, expires at the end of 2004 and there is no assurance that it can be
extended on favorable terms. You should note that landfill gas is a "greenhouse
gas" that promotes global warming and that current U.S. government policy is to
encourage burning of landfill gas to reduce local and global environmental
harms. This may lead to international, federal or local initiatives that would
benefit the Project, but no specific program has been proposed, to the Trust's
knowledge.
(ii) Stillwater Project. In October 1991, the Trust acquired certain equity
rights with respect to a 3.5 megawatt (nominal capacity) hydroelectric facility
which was then under construction on the Hudson River in the village of
Stillwater, New York (approximately 30 miles northeast of Albany) at the site of
a pre-existing 800 foot wide masonry dam structure (the "Stillwater Project")
for a purchase price of $750,000. The Stillwater Project commenced commercial
operation in May 1993.
The Trust and affiliates of the general contractor and affiliates of
the equipment supplier formed Stillwater Hydro Partners, L.P. ("SHP") to
continue development of the Stillwater Project. The Trust's total investment was
$1,162,000. Debt financing for the Project was provided by the CIT Group/Capital
Equipment Financing Inc. ("CIT"). The CIT financing is a fixed rate 15-year term
loan in the principal amount of approximately $8,995,000, with the final payment
due in 2009. In addition to the fixed interest payments, CIT is also entitled to
receive, as additional interest, 22.5% of the available cash flow of the
Stillwater Project. The term loan is payable only by SHP, and is non-recourse to
the Trust. The projections furnished by SHP to CIT and the Trust indicated
sufficient annual cash flow to permit SHP to meet its payment obligations to CIT
and the Trust.
Please refer to the Trust's prior Annual Reports on Form 10-K for
additional information on the financing history of the Project.
The Trust now owns a fixed preferred partnership interest entitling it
to aggregate distributions of $1 million, plus a compound annual return of 12%
thereon until paid in full. Over the nine year schedule of annual payments, the
Trust was to receive total payments, including the annual return, of
approximately $1,720,000. SHP is required to apply substantially all of SHP's
available cash flow after funding of debt service (up to a maximum amount each
year) to satisfy the payment obligation to the Trust, with any shortfalls to be
carried forward with interest into subsequent years.
The Trust has only received a single partial payment of $126,000 in
1994 and does not expect to receive any additional payments for an indefinite
period of time. The Stillwater Project has been unable to earn sufficient cash
flow to cover its fixed debt service obligations and to pay all of the 22.5% of
available cash flow that CIT is entitled to. The Project's revenues are
dependent upon water levels in the Hudson River, which have fluctuated
significantly in the last six years. During low flow periods, generation is
curtailed. The Project's ability to reach projected generation levels requires
the use of flashboards during high water periods. The flashboards are removable
wood and metal planks that fit over spillways and that increase the level of the
water behind the dam by up to two feet. The extra water height behind the dam
increases the force of the water through the generation turbines and thus
increases power output. However, the flashboards as installed have consistently
been ripped from their moorings by high water flows and floating debris, and
they cannot be reinstalled during high water periods. Further, state
environmental requirements limit the times during which repairs can be made. As
a result, power output during high flow periods has not reached projected
levels. In addition, even if water flow levels are optimal, the Project is
unable to generate the full projected output of 3.5 megawatts of electricity
because of a design defect.
For these reasons, the Trust reviewed the value of the Stillwater
Project in 1997 on the assumption that the Project will be able to meet debt
service obligations to CIT as scheduled but that the Project will be unable to
make any distributions to the Trust until the CIT loan is retired in 2009. On
those assumptions and discounting post-2009 payments at the rate of 18% per
year, the Trust's investment in the Stillwater Project was revalued to $600,000
as of December 31, 1997 and the Trust took an investment writedown of $400,000,
charged against income.
Electricity generated by the Stillwater Project is sold to Niagara Mohawk
Power Corporation under a long-term Power Contract with a remaining term of 28
years.
(iii) South Boston Project. The Trust made an approximately $3.9 million
equity investment (including without limitation construction costs and cash
advances)in a 3 megawatt electrical generating facility that was constructed in
an industrial park near South Boston, Halifax County, Virginia (the "South
Boston Project"). From time to time the Trust has also referred to this Project
as the "Lynchburg" or the "Halifax" project. The facility used waste oil as its
primary fuel source for three refurbished reciprocating diesel engine generators
and also included a waste oil treatment facility. The Trust's investment covered
all development and construction costs of the facility.
In July 1995, Virginia Electric Power and Light Co. ("VEPCO"), the
utility which purchased electricity from the South Boston Project under a
long-term Power Contract, sent a notice to the Trust purporting to cancel the
Power Contract for alleged failures by the project to comply with the terms of
the Power Contract. After negotiations with VEPCO to rescind the notice proved
unsuccessful, the Trust sued VEPCO in the Federal District Court for the Eastern
District of Virginia to compel VEPCO to continue to honor the terms of the Power
Contract. On September 15, 1995, the judge hearing the case entered an order in
favor of the Trust compelling VEPCO to continue to honor the terms of the Power
Contract. VEPCO appealed the judge's decision but made payments under the Power
Contract.
On January 17, 1997, the Trust and VEPCO settled the lawsuit and VEPCO paid
the Trust's subsidiary $3,750,000 in cash and waived substantial capacity
payments that might have been due to VEPCO in the event of an early termination
of the Power Contract. The subsidiary surrendered the Power Contract to VEPCO
and agreed to the entry of an order dismissing its lawsuit against VEPCO. The
settlement permits the Trust or buyers of the Project to continue operating the
generating station and the associated waste oil treatment plant, but not to sell
electricity except to investor-owned electric utilities for resale or use
outside VEPCO's service area or to meet the facility's own load. The facility
may be operated for non-generating purposes such as waste oil treatment.
The net proceeds from the settlement (after deduction of shutdown and other
costs for the Project) and the return of security for a letter of credit were
approximately $3.4 million, substantially all of which was used to purchase the
remaining equity interest in the Olinda Project.
The Trust shut down the South Boston Project in January 1997 and sold it to
an unaffiliated third party in December 1997 for a $700,000 promissory note
secured by the Project property and the right to receive 2% of any future gross
revenues from the Project. The Trust also financed $123,000 of improvements to
the Project to enhance its ability to process waste oil. The buyer of the South
Boston Project was unable to operate it successfully and closed it in
[August]_1999. After examining the potential profitability of the Project and
the prospects of selling it to any other business the Trust determined that
there was no substantial probability of recovering any of the investment.
Although the Trust knows of no environmental problems at the Project, the fact
that the buyer was operating the Project as a resource recovery site and the
possibility that an unknown or undetectable problem could lead to large
environmental liabilities is a major deterrent to sale or operation of the
Project. The Trust wrote off the mortgage as being uncollectible effective
December 31, 1999.
(iv) Mobile Power Units. Effective August 1999, the Trust purchased two
mobile electric generating units manufactured by Caterpillar Inc. (the "Mobile
Power Units"). The Units combine a large diesel engine with a fuel tank,
emission equipment, an electric generator and control equipment on a single skid
and therefore can be moved to remote areas as a self-contained power plant. The
owner of the Units is Ridgewood Mobile Power I, LLC, a wholly-owned subsidiary
of the Trust. The Trust bought the Units from Hawthorne Power Systems, Inc.
("Hawthorne") of San Diego, California (a Caterpillar distributor) for $710,241.
Hawthorne added the Units to its own rental fleet of similar equipment and rents
them to contractors, engineering firms and other industrial or commercial
customers who need emergency, temporary or peak power supplies. The Trust
receives 80% of the net rental revenues and is responsible for major
maintenance; Hawthorne receives 20% of the net rental revenues to compensate it
for marketing managing the rentals. In 1999, the Trust received $59,000 of
distributions from the Mobile Power Units.
Additional information regarding the Projects is found in the Notes to
the Financial Statements.
(3) Project Operation
The success of a Qualifying Facility Project is dependent on the ability of
the Project to perform efficiently under its Power Contract and is also
dependent upon obtaining a necessary fuel supply at reasonable prices (or
obtaining rights or licenses in the case of hydropower or geothermal resources).
The Olinda Project has a long-term gas supply agreement providing for 100% of
its requirements (subject to actual availability of landfill gas) at a fixed
price escalated by 3.7% annually through the term. The Stillwater Project has
the necessary permits to use hydroelectric resources and thus may use those
resources to the extent available. Use of those resources is limited seasonally
by the New York State Department of Environmental Conservation to protect fish
spawning populations and river quality and is subject to unpredictable local
drought and flood conditions.
The Mobile Power Units are managed by Hawthorne and rented at fixed rates.
Their major costs are capital recovery, maintenance, taxes and storage costs;
operating costs are borne by the customer. Electricity generated from the Mobile
Power Units is generally used by the renter on-site. If there were a shortage of
electric generation capacity, the Units could be rented as additional peak
generation capacity by a utility or electricity seller, subject to local
environmental limitations. The Mobile Power Units are rented at fixed prices per
month and are operated by the renter. Rental periods typically range from one to
six weeks.
The major costs of a Qualifying Facility Project while in operation will be
debt service (if applicable), fuel, taxes, maintenance and operating labor. The
ability to reduce operating interruptions and to have a Project's capacity
available at times of peak demand are critical to the profitability of a
Project. Accordingly, skilled management is a major factor in the Trust's
business.
The Managing Shareholder has organized Ridgewood Power Management LLC
("RPMCo") to provide operating management for facilities operated by its
investment programs, and has assigned day-to-day management of the Olinda
Project to RPMCo. Like the Managing Shareholder, RPMCo is wholly owned by Robert
E. Swanson. It entered into an "Operation Agreement," effective June 1, 1997,
under which RPMCo provides all management, purchasing, engineering, planning and
administrative services for the Olinda Project. These services are charged to
the Project at RPMCo's cost. See Item 10 - Directors and Executive Officers of
the Registrant and Item 13 Certain Relationships and Related Party Transactions
for further information regarding the Operation Agreement and RPMCo and for the
cost reimbursements received by RPMCo.
The Stillwater Project is managed by its remaining equity partners and
the Trust has no management responsibility for the Project. The Mobile Power
Units are managed by Hawthorne. Their major costs are capital recovery,
maintenance, taxes and storage costs; operating costs are borne by the customer.
Electricity produced by a Qualifying Facility Project is delivered to the
electric utility purchaser through transmission lines and equipment that are
built to interconnect with the utility's existing power grid. The Power
Contracts for the Projects require the utility to take all electricity generated
up to the Projects' rated capacity and accordingly seasonal fluctuations in
demand do not affect the Projects. The price payable to the Olinda Project
increases in daylight hours of the summer months when demand peaks, so the Trust
attempts to perform maintenance during off-peak periods. Electricity generated
from the Mobile Power Units is generally used by the renter on-site. If there
were a shortage of electric generation capacity, the Units could be rented as
additional peak generation capacity by a utility or electricity seller, subject
to local environmental limitations.
Generally, working capital requirements are not a significant item for the
Trust. See Item 7 - Management's Discussion and Analysis.
Most Projects require a variety of permits, including zoning and
environmental permits. Such permits must usually be kept in force in order for a
Project to continue its operations. The Trust is currently updating air, water
and storm water discharge permits for the Olinda Project and has filed a Title V
application under the Clean Air Act Amendments of 1990. If future environmental
standards require that a Project spend increased amounts for compliance, such
increased expenditures could have an adverse effect on the Trust to the extent
it is a holder of such Project's equity securities. See Item 1(c)(6) --
Business-Narrative Description of Business -- Regulatory Matters.
(4) Developments Affecting Power Contracts.
The Trust is somewhat insulated from recent deregulatory trends in the
electric industry because the Olinda Project and Stillwater Project are
Qualifying Facilities with long-term formula-price Power Contracts. Those Power
Contracts now provide for rates in excess of current short-term rates for
purchased power. There had been speculation that in the course of deregulating
the electric power industry, federal or state regulators or utilities would
attempt to invalidate these power purchase contracts as a means of throwing some
of the costs of deregulation on the owners of independent power plants.
To date, the Federal Energy Regulatory Commission and each state regulator
that has addressed the issue have ruled that existing Power Contracts will not
be affected by their deregulation initiatives. Instead, the state of California,
as with most other state plans for deregulation of the electric power industry,
is treating the value of long-term Power Contracts that are above current and
anticipated market prices as "stranded costs" of the utilities. The utilities
are to be allowed to recover those costs during a transition period that ends in
2003 in California. This is done by imposing a transition fee or surcharge on
rates that is paid to the utility. This alternative, which is being implemented
in California, may reduce incentives to invalidate the Olinda Project's Power
Contract. In some states, utilities are being encouraged or ordered to issue
bonds or other financial instruments to retire stranded cost assets or
contracts, supported by transition charges.
No action has yet been taken by federal or state legislators to date to
impair Independent Power Projects' existing power sales contracts, and there are
federal constitutional provisions restricting actions to impair existing
contracts. There can not be any assurance, however, that the rapid changes
occurring in the industry and the economy as a whole would not cause regulators
or legislative bodies to attempt to change the regulatory structure in ways
harmful to Independent Power Projects or to attempt to impair existing
contracts. In particular, some regulatory agencies have urged utilities to
construe Power Contracts strictly and to police Independent Power Projects
compliance with those Power Contracts vigorously. Predicting the consequences of
any legislative or regulatory action is inherently speculative and the effects
of any action proposed or effected in the future may harm or help the Fund.
Because of the consistent position of the regulatory authorities to date and the
other factors discussed here, the Trust believes that so long as the Projects
perform their obligations under the Power Contracts, it will be entitled to the
benefits of those contracts.
In recent years, many electric utilities have attempted to exploit all
possible means of terminating Power Contracts with independent power projects,
including requests to regulatory agencies and alleging violations of even
immaterial terms of the Power Contracts as justification for terminating those
contracts. If such an attempt were to be made, the Trust might face material
costs in contesting those utility actions. As described above, this occurred at
the Trust's former South Boston Project. Substantially all of the cost of
litigation was voluntarily paid by the Managing Shareholder, but the Managing
Shareholder has not agreed to pay litigation or dispute costs for any future
dispute.
Other utilities have from time to time made offers to purchase and
terminate Power Contracts for lump sums. No such offer has been suggested or
made to the Trust for either the Olinda or Stillwater Project Power Contracts,
although the Trust would entertain such an offer. Finally, the Power Contracts
are subject to modification or rejection in the event that the utility purchaser
enters bankruptcy. There can be no assurance that the utility purchasers will
not declare bankruptcy.
After the Power Contracts expire (in 2004 for Olinda and 2028 for
Stillwater) or terminate for other reasons, the Projects under currently
anticipated conditions would be free to sell their output on the competitive
electric supply market, either in spot, auction or short-term arrangements or
under long-term contracts if those Power Contracts could be obtained. There is
no assurance that the Projects could sell their output or do so profitably. The
Trust is unable to anticipate whether the fuel cost advantages the Projects
currently have as balanced against their relatively high costs of operation and
maintenance would allow the Projects to operate profitably.
(5) Competition
The Olinda and Stillwater Projects, as described above, are not currently
subject to competition because those Projects have entered into long-term
agreements to sell their output at specified prices. However, a particular
Project could be subject to future competition to market its electricity output
if its Power Contract expires or is terminated because of a default or failure
to pay by the purchasing utility or other purchaser; due to bankruptcy or
insolvency of the purchaser; because of the failure of a Project to comply with
the terms of the Power Contract; regulatory changes; or other reasons. The
Olinda Project would then face significant competition to market its capacity
and energy output in the newly developing competitive market in California and
would face material cost pressures. The process of deregulation in New York,
where the Stillwater Project is located, is still uncertain and it is difficult
to estimate the level of marketing competition that it would face in any such
event.
The Mobile Power Units compete against numerous other fleets of mobile
power generation equipment on a regional and international level. To some extent
local or governmental electricity utilities also compete to provide short-term
electricity in less-remote areas. Hawthorne owns many units in its rental fleet
but has agreed to market the Trust's Units on a basis at least as favorable at
it does for its own equipment. Demand for the Units is heavily dependent on the
level of construction and civil engineering work in the Southern California area
and on the availability of equipment from vendors, other area rental fleets and,
to a limited extent, from outside-of-area fleets. Demand can be very volatile.
Further, Hawthorne may cancel the rental arrangement on short notice.
6. Regulatory Matters.
Projects are subject to energy and environmental laws and regulations at
the federal, state and local levels in connection with development, ownership,
operation, geographical location, zoning and land use of a Project and emissions
and other substances produced by a Project. These energy and environmental laws
and regulations generally require that a wide variety of permits and other
approvals be obtained before the commencement of construction or operation of an
energy-producing facility and that the facility then operate in compliance with
such permits and approvals. Since the Trust operates as a "business development
company" under the 1940 Act, it is also subject to provisions of that act
pertaining to such companies.
(i) Energy Regulation.
(A) PURPA. The enactment in 1978 of PURPA and the adoption of regulations
thereunder by FERC provided incentives for the development of cogeneration
facilities and small power production facilities meeting certain criteria.
Qualifying Facilities under PURPA are generally exempt from the provisions of
the Public Utility Holding Company Act of 1935, as amended (the "Holding Company
Act"), the Federal Power Act, as amended (the "FPA"), and, except under certain
limited circumstances, state laws regarding rate or financial regulation. In
order to be a Qualifying Facility, a cogeneration facility must (a) produce not
only electricity but also a certain quantity of heat energy (such as steam)
which is used for a purpose other than power generation, (b) meet certain energy
efficiency standards when natural gas or oil is used as a fuel source and (c)
not be controlled or more than 50% owned by an electric utility or electric
utility holding company. Other types of Independent Power Projects, known as
"small power production facilities," can be Qualifying Facilities if they meet
regulations respecting maximum size (in certain cases), primary energy source
and utility ownership. Recent federal legislation has eliminated the maximum
size requirement for solar, wind, waste and geothermal small power production
facilities (but not for hydroelectric or biomass) for a fixed period of time.
In addition, PURPA requires electric utilities to purchase electricity
generated by Qualifying Facilities at a price equal to the purchasing utility's
full "avoided cost" and to sell back-up power to Qualifying Facilities on a
non-discriminatory basis. Avoided costs are defined by PURPA as the "incremental
costs to the electric utility of electric energy or capacity or both which, but
for the purchase from the Qualifying Facility or Qualifying Facilities, such
utility would generate itself or purchase from another source." While public
utilities are not required by PURPA to enter into long-term Power Contracts to
meet their obligations to purchase from Qualifying Facilities, PURPA helped to
create a regulatory environment in which it was more common for such contracts
to be negotiated until recent years.
The exemptions from extensive federal and state regulation afforded by
PURPA to Qualifying Facilities are important to the Trust and its competitors.
The Trust believes that each of its Projects is a Qualifying Facility. If a
Project loses its Qualifying Facility status, the utility can reclaim payments
it made for the Project's non-qualifying output to the extent those payments are
in excess of current avoided costs (which are generally substantially below the
Power Contract rates) or the Project's Power Contract can be terminated by the
electric utility.
(B) The 1992 Energy Act. The Comprehensive Energy Policy Act of 1992 (the
"1992 Energy Act") empowered FERC to require electric utilities to make
available their transmission facilities to and wheel power for Independent Power
Projects under certain conditions and created an exemption for electric
utilities, electric utility holding companies and other independent power
producers from certain restrictions imposed by the Holding Company Act. The
Trust's Projects will not be directly affected by the 1992 Energy Act unless
they were to attempt to sell electricity to another customer rather than under
the Power Contracts. The Trust does not anticipate that that would happen.
(C) The Federal Power Act. The FPA grants FERC exclusive rate-making
jurisdiction over wholesale sales of electricity in interstate commerce. Again,
this will not affect the Trust's Projects unless they were to attempt sales to
other customers.
(D) State Regulation. The Trust's Projects are not subject to material
state economic regulation except for requirements in California and New York to
supply the purchasing utility with information to confirm compliance with
Qualifying Facility fuel use and efficiency requirements and to make the
Projects available for audit and inspection to confirm Qualifying Facility
compliance. The Olinda Project as operated by the Trust complies with these
requirements and the Trust believes that both the Olinda and Stillwater Projects
meet Qualifying Facility standards. States also have authority to regulate
certain environmental, health and siting aspects of Qualifying Facilities.
(E) Mobile Power Units. The Mobile Power Units, as temporary on-site units
operated by the electricity consumer, are not subject to economic regulation in
California or most other juridictions. If a Unit were rented by a regulated
utility, that utility might be subject to economic regulation but the rental fee
for the Unit would probably not be directly regulated. There might be an
indirect regulatory effect to the extent that the utility were regulated as to
the rental price it would be authorized to pay. Under current conditions in
California, this is unlikely.
(ii) Environmental Regulation.
The operation of Independent Power Projects and the exploitation of natural
resource properties are subject to extensive federal, state and local laws and
regulations adopted for the protection of human health and the environment and
to regulate land use. The laws and regulations applicable to the Trust and
Projects in which it invests primarily involve the discharge of emissions into
the water and air and the disposal of waste, but also include wetlands
preservation, fisheries protection (at the Stillwater Project) and noise
regulation. These laws and regulations in many cases require a lengthy and
complex process of renewing or obtaining licenses, permits and approvals from
federal, state and local agencies. Obtaining necessary approvals regarding the
discharge of emissions into the air is critical to a Project and can be
time-consuming and difficult. Each Project requires technology and facilities
which comply with federal, state and local requirements, which sometimes result
in extensive negotiations with regulatory agencies. Meeting the requirements of
each jurisdiction with authority over a Project may require extensive
modifications to existing Projects.
The Clean Air Act Amendments of 1990 contain provisions which regulate the
amount of sulfur dioxide and oxides of nitrogen which may be emitted by the
Olinda Project. (The Stillwater Project, which is a hydroelectric plant, does
not burn fuel.) These emissions may be a cause of "acid rain." The Olinda
Project, which is fueled by landfill gas, does emit some sulfur dioxide and
nitrogen oxides, but to the extent its fuel is methane, it is not expected to be
materially burdened by the acid rain provisions of the Clean Air Act Amendments.
In any case, Qualifying Facilities are currently exempt from the acid rain
control program of the Clean Air Act Amendments. Non-Qualifying Facility
Projects in fixed locations will require "allowances" to emit sulfur dioxide
after the year 2000. Under the Amendments, these allowances may be purchased
from utility companies then entitled to emit sulfur dioxide or from the
Environmental Protection Agency ("EPA"). Further, an Independent Power Project
subject to the requirements has a priority over utilities in obtaining
allowances directly from the EPA if (a) it is a new facility or unit used to
generate electricity; (b) 80% or more of its output is sold at wholesale; (c) it
does not generate electricity sold to affiliates (as determined under the
Holding Company Act) of the owner or operator (unless the affiliate cannot
provide allowances in certain cases) and (d) it is non-recourse
project-financed. The market price of an allowance cannot be predicted with
certainty at this time and there is no assurance that a broad market for those
allowances will develop or continue, although efforts have been made by certain
commodities exchanges to create a market.
Title IV of the Clean Air Act Amendments requires significant reductions in
nitrogen oxide emissions from power plants. The first set of standards became
applicable in 1996 for large-scale steam boilers and large coal and oil-fired
plants. The standards require reductions of 25% to 50% in nitrogen oxide
emissions. Standards for other large generating plants become effective in 2000
and would require 40% to 50% reductions. States are imposing additional
restrictions. Nitrogen oxide emissions can be particularly difficult or
expensive to reduce because nitrogen oxides are produced at higher operating
temperatures, while plant efficiencies tend to increase with operating
temperatures. Although engines of the size used at the Olinda Project are
currently not subject to the new Title IV requirements, the Trust anticipates
that eventually additional nitrogen oxide regulations may be applied to the
Olinda Project. Those might materially increase the operating costs of
generating plants.
In July 1997 the Environmental Protection Agency adopted more stringent
standards for levels of ozone and small particulate matter (particles less than
25 microns in diameter) in geographic areas. These new standards may cause the
area in which the Olinda Project is located to be classified as a non-attainment
area. If so, California might be required to impose additional requirements for
industries to reduce emissions of ozone-forming pollutants (in particular,
nitrogen oxides) if its existing requirements are inadequate. It is uncertain
whether or how any reductions would be applied to small facilities such as the
Olinda Project. If reductions were required, the Trust might have to make
significant capital investments to install new control technology or might have
to reduce operations. Nitrogen oxide reductions can be difficult to achieve with
add-on equipment and often require decreases in operating efficiency, both of
which could cause material cost to the Trust. It is not possible at this time to
estimate whether or not any potential regulatory changes would materially affect
the Trust.
Title V of the Clean Air Act Amendments requires states to create a
new, ongoing licensing system for existing sources of air emissions. The Trust
has filed an application under Title V for the Olinda Project. The Title V
requirements are not currently materially different from the Project's existing
limitations but the process of prosecuting the application is time-consuming and
extremely technical.
The Clean Air Act Amendments empower states to impose annual operating
permit fees of at least $25 per ton of regulated pollutants emitted up to
$100,000 per pollutant. To date, no state in which the Trust operates has done
so. If a state were to do so, such fees might have a material effect on the
Trust's costs of generation, in light of the relatively small size of the
Trust's facilities as opposed to large utility generation plants that might
benefit from the cap on fees.
The Trust's Projects must comply with many federal and state laws and
regulations governing wastewater and stormwater discharges from the Projects.
These are generally enforced by states under "NPDES" permits for point sources
of discharges and by stormwater permits. The Olinda Project is currently
revising its stormwater discharge permit application but does not anticipate
material adverse action. Under the Clean Water Act, NPDES permits must be
renewed every five years and permit limits can be reduced at that time or under
re-opener clauses at any time. The Projects have not had material difficulty in
complying with their permits or obtaining renewals. The Projects use closed-loop
engine cooling systems which do not require large discharges of coolant except
for periodic flushing to local sewer systems under permit and do not make other
material discharges.
The Trust's Projects are subject to and comply with the reporting
requirements of the Emergency Planning and Community Right-to-Know Act that
require the Projects to prepare toxic release inventory release forms. These
forms list all toxic substances on site that are used in excess of threshold
levels so as to allow governmental agencies and the public to learn about the
presence of those substances and to assess potential hazards and hazard
responses. The Trust does not anticipate that this will result in any material
adverse effect on it.
The Mobile Power Units, which do not have a fixed location, are subject
to differing air quality standards that depend in part on the locations of use,
the amount of time and time periods of use and the quantity of pollutants
emitted. The Trust believes that the Units as used comply with all applicable
air quality rules.
Based on current trends, the Managing Shareholder expects that
environmental and land use regulation will become more stringent. The Trust and
the Managing Shareholder have developed limited expertise and experience in
obtaining necessary licenses, permits and approvals. The Trust will rely upon
co-owners of the Stillwater Project and as to all Projects on qualified
environmental consultants and environmental counsel retained by it to assist in
evaluating the status of Projects regarding such matters.
(iii) The 1940 Act.
Since its Shares are registered under the 1934 Act, the Trust is required
to file with the Commission certain periodic reports (such as Forms 10-K (annual
report), 10-Q (quarterly report) and 8-K (current reports of significant events)
and to be subject to the proxy rules and other regulatory requirements of that
act that are applicable to the Trust. The Trust has no intention to and will not
permit the creation of any form of a trading market in the Shares in connection
with this registration.
On May 26, 1994, the Trust notified the Securities and Exchange Commission
(the "Commission") of its election to be a "business development company" and
registered its Shares under the 1934 Act. On June 25, 1994, the election and
registration became effective. As a "business development company," the Trust is
a closed-end company (defined by the 1940 Act as a company that does not offer
for sale or have outstanding any redeemable security) that is regulated under
the 1940 Act only as a business development company. The act contains
prohibitions and restrictions on transactions between business development
companies and their affiliates as defined in that act, and requires that a
majority of the board of the company be persons other than "interested persons"
as defined in the act. The Board of the Trust is comprised of Ridgewood Power
and three individuals, John C. Belknap, Dr. Richard D. Propper and Seymour
Robin, who also serve as independent trustees of Ridgewood Electric Power Trust
IV and the Ridgewood Power Growth Fund, a two similar programs sponsored by the
Managing Shareholder, but who are not otherwise affiliated with the Trust,
Ridgewood Power or any of their affiliates. See Item 10 -- Directors and
Executive Officers below.
Under the 1940 Act, Commission approval is required for certain
transactions involving certain closely affiliated persons of business
development companies, including many transactions with the Managing Shareholder
and the other investment programs sponsored by the Managing Shareholder. There
can be no assurance that such approval, if required, would be obtained. In
addition, a business development company may not change the nature of its
business so as to cease to be, or to withdraw its election as, a business
development company unless authorized to do so by at least a majority vote of
its outstanding voting securities.
The 1940 Act restricts the kind of investments a business development
company may make. A business development company may not acquire any asset other
than a "Qualifying Asset" unless, at the time the acquisition is made,
Qualifying Assets comprise at least 70% of the company's total assets by value.
The principal categories of Qualifying Assets that are relevant to the Trust's
activities are:
(A) Securities issued by "eligible portfolio companies" that are purchased
by the Trust from the issuer in a transaction not involving any public offering
(i.e., private placements of securities). An "eligible portfolio company" (1)
must be organized under the laws of the United States or a state and have its
principal place of business in the United States; (2) may not be an investment
company other than a small business investment company licensed by the Small
Business Administration and wholly-owned by the Trust and (3) may not have
issued any class of securities that may be used to obtain margin credit from a
broker or dealer in securities. The last requirement essentially excludes all
issuers that have securities listed on an exchange or quoted on the National
Association of Securities Dealers, Inc.'s national market system, along with
other companies designated by the Federal Reserve Board. The Olinda and
Stillwater Projects are Qualifying Assets under this provision.
(B) Securities received in exchange for or distributed on or with respect
to securities described in paragraph (A) above, or on the exercise of options,
warrants or rights relating to those securities.
(C) Cash, cash items, U.S. Government securities or high quality debt
securities maturing not more than one year after the date of investment.
A business development company must make available "significant managerial
assistance" to the issuers of Qualifying Assets described in paragraphs (A) and
(B) above, which may include without limitation arrangements by which the
business development company (through its directors, officers or employees)
offers to provide (and, if accepted, provides) significant guidance and counsel
concerning the issuer's management, operation or business objectives and
policies.
A business development company also must be organized under the laws of the
United States or a state, have its principal place of business in the United
States and have as its purpose the making of investments in Qualifying Assets
described in paragraph (A) above.
The Managing Shareholder believes that it may no longer be necessary for
the Trust to continue its status as a business development company, because of
the Managing Shareholder's active involvement in operating Projects through the
Trust and other investment programs. Although the Managing Shareholder believes
it would be beneficial to the Trust to end the election and reduce costs of
legal compliance that do not contribute to income, the process of withdrawing
the business development company election requires a proxy solicitation and a
special vote of investors, which is also costly. Accordingly, the Managing
Shareholder does not intend at this time to request the Investors' consent to
withdrawing the business development company election. Any change in the Trust's
status will be effected only with the Investors' consent.
As required by the business development company election, the Trust's
Shares are currently registered under the 1934 Act, which requires the Trust to
make periodic reports to the Securities and Exchange Commission, to comply with
proxy solicitation and insider trading restrictions and to take other actions
required of most publicly traded companies. The Trust currently has 218
Investors of record, which is less than the minimum number (300) that would
require the Trust to maintain registration if the Trust were not a business
development company. Because the Trust is not currently withdrawing its business
development company election, it will continue to be required to be registered
and report under the 1934 Act.
(iv) Potential Legislation and Regulation.
All federal, state and local laws and regulations, including but not
limited to PURPA, the Holding Company Act, the 1992 Energy Act and the FPA, are
subject to amendment or repeal. Future legislation and regulation is uncertain,
and could have material effects on the Trust.
(d) Financial Information about Foreign and Domestic Operations and Export
Sales.
The Trust has invested in Projects located in California, New York and
Virginia and has no foreign operations.
(e) Employees.
The employees of the Olinda Project are employed by RPMCo, the Trust is
administered by the Managing Shareholder and accordingly the Trust has no
employees. The persons described below at Item 10 -- Directors and Executive
Officers of the Registrant serve as executive officers of the Trust and have the
duties and powers usually applicable to similar officers of a Delaware
corporation in carrying out the Trust business.
Item 2. Properties.
Pursuant to the Management Agreement between the Trust and the Managing
Shareholder (described at Item 10(c) -- Directors and Executive Officers --
Management Agreement), the Managing Shareholder provides the Trust with office
space at the Managing Shareholder's principal office at The Ridgewood Commons,
947 Linwood Avenue, Ridgewood, New Jersey 07450.
The following table shows the material properties (relating to Projects)
owned or leased by the Trust's subsidiaries or partnerships in which the Trust
has an interest. All of the Projects are described in further detail at Item
1(c)(2).
Approximate
Square
Ownership Ground Approximate Footage of Description
Interests Lease Acreage Project (Actual of
Project Location in Land Expiration of Land or Projected) Project
Olinda Olinda, Leased 2004 2 6,000 Landfill
California gas-fired
generating
facility
Still- Stillwater, Leased 2029 .75 N/A Hydro-
water New York and electric
Licensed plant
Item 3. Legal Proceedings.
From time to time, the Trust and its subsidiaries are engaged in legal
proceedings incident to the normal course of their businesses which primarily
involve claims for damages, or other immaterial actions.
Item 4. Submission of Matters to a Vote of Security Holders.
The Trust did not submit any matters to a vote of the Investors during the
fourth quarter of 1999.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) Market Information.
The Trust has 105.5 Investor Shares of beneficial interest in the Trust
resulting from the merger with the Partnership which was effective on June 15,
1994. There is currently no established public trading market for the Investor
Shares and the Trust does not intend to allow a public trading market to
develop. As of the date of this Form 10-K, all such Investor Shares have been
issued and are outstanding. There are no outstanding options or warrants to
purchase or securities convertible into Investor Shares and the Trust has no
intention to make any public offering of its Investor Shares.
Investor Shares are restricted as to transferability under the Declaration.
In addition, under federal laws regulating securities the Investor Shares have
restrictions on transferability when they are held by persons in a control
relationship with the Trust. Investors wishing to transfer Shares should also
consider the applicability of state securities laws. The Investor Shares have
not been and are not expected to be registered under the Securities Act of 1933,
as amended (the "1933 Act"), or under any other similar law of any state (except
for certain registrations that do not permit free resale) in reliance upon what
the Trust believes to be exemptions from the registration requirements contained
therein. Because the Investor Shares have not been registered, they are
"restricted securities" as defined in Rule 144 under the 1933 Act.
The Managing Shareholder is considering the possibility of a combination of
the Trust and five subsequent investment programs sponsored by the Managing
Shareholder (Ridgewood Electric Power Trusts II through V and The Ridgewood
Power Growth Fund) into a publicly traded entity. This would require the
approval of the Investors in the Trust and the other programs after proxy
solicitations complying with requirements of the Securities and Exchange
Commission, compliance with the "rollup" rules of the Securities and Exchange
Commission and other regulations, and a change in the federal income tax status
of the Trust from a partnership (which is not subject to tax) to a corporation.
The process of considering and effecting a combination, if the decision is made
to do so, will be very lengthy. There is no assurance that the Managing
Shareholder will recommend a combination, that the Investors of the Trust or
other programs will approve it, that economic conditions or the business results
of the participants will be favorable for a combination, that the combination
will be effected or that the economic results of a combination, if effected,
will be favorable to the Investors of the Trust or other programs.
(b) Holders.
As of the date of this Form 10-K, there are 218 holders of record of
Investor Shares.
(c) Dividends.
The Trust made distributions as follows for the years 1998 and 1999:
Year ended Year ended
December 31, December 31,
1999 1998
Total distributions to Investors $1,297,654 $1,310,319
Distributions per Investor Share 12,300 12,420
Total distributions to
Managing Shareholder 13,108 13,326
The Trust converted to a quarterly distribution schedule (February, May,
August and November) in May 1999. While the Trust expects to make quarterly
distributions, the Trust's ability to make future distributions to the Investors
and their timing will depend on the net cash flow of the Trust and retention of
reasonable reserves as determined by the Trust to cover its anticipated
expenses.
The Trust's cash flow comes primarily from distributions from Projects.
Those distributions are from cash flow of the Projects, which includes income of
Projects plus funds representing depreciation and amortization charges taken by
the Projects. Because the Trust's objective is to distribute net cash flow, a
substantial portion of many distributions by the Trust will include cash flow
derived from depreciation and amortization charges against assets at the Project
level. Nevertheless, because the Projects are not consolidated with the Trust
for accounting purposes, all funds received from Projects after June 1, 1997 are
considered to be revenue to the Trust for accounting purposes. Distributions may
also include cash released from operating or debt service reserves, or for
periods before June 1, 1997 at the Olinda Project, amounts treated as a return
of capital. Investors should be aware that the Trust is organized to return net
cash flow rather than accounting income to Investors.
Item 6. Selected Financial Data.
The following data is qualified in its entirety by the financial statements
presented elsewhere in this Annual Report on Form 10-K.
Selected Financial Data
As of and for the year ended December 31,
1999 1998 1997 1996 1995
Total Fund Information:
Net project revenues $1,850,230 $2,049,728 $ 1,851,763 $606,863 $552,769
Net income (loss) 1,333,461 1,963,215 1,316,797 496,802 418,417
Net assets (share-
holders' equity) 7,655,502 7,632,803 6,993,143 6,604,641 6,916,437
Investments in power
generation limited
partnerships 6,583,781 6,560,616 6,515,771 7,177,875 7,207,846
Total assets $7,766,845 7,710,882 $7,668,271 7,505,197 7,531,306
Per Investor Share
Project revenues $ 17,537 $19,429 $17,552 $5,752 $5,240
Expenses 5,559 1,390 5,917 1,069 $1,273
Net income (loss) 12,639 18,609 12,481 4,709 3,966
Net asset value $72,564 $72,349 $66,286 $62,832 $65,559
Distributions per
Investor Share $12,300 $12,420 $ 8,711 $ 7,588 $ 8,025
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Introduction
The following discussion and analysis should be read in conjunction with the
Trust's financial statements and the notes thereto presented elsewhere herein.
The Trust's financial statements are prepared under generally accepted
accounting principles applicable to business development companies. Accordingly,
the Trust carries its investment in the Projects it owns at fair value and does
not consolidate its financial statements with the financial statements of the
Projects. Revenue is recorded by the Trust as cash distributions are declared by
the Projects. Trust revenues may fluctuate from period to period depending on
the operating cash flow generated by the Projects and the amount of cash
retained to fund capital expenditures. Dollar amounts in this discussion are
generally rounded to the nearest $1,000.
Outlook
The U.S. electricity markets are being restructured and there is a trend away
from regulated electricity systems towards deregulated, competitive market
structures. The States that the Trust's Projects operate in have passed or are
considering new legislation that would permit utility customers to choose their
electricity supplier in a competitive electricity market. The Olinda and
Stillwater Projects are "Qualified Facilities" as defined under the Public
Utility Regulatory Policies Act of 1978 and currently sell their electric output
to utilities under long-term contracts expiring in 2004 and 2029, respectively.
During the term of the contracts, the utilities may or may not attempt to buy
out the contracts prior to expiration. At the end of the contracts, the Projects
will become merchant plants and may be able to sell the electric output at then
current market prices. There can be no assurance that future market prices will
be sufficient to allow the Trust's Projects to operate profitably.
All available cash flow from the Stillwater Project is being used to meet debt
service requirements. Distributions to the Trust will resume after repayment of
bonds and partner loan obligations. Assuming normal water flows and no
operational failures, the bonds and partner loans should be repaid in or after
2010.
Additional trends affecting the independent power industry generally are
described at Item 1 - Business.
Results of Operations Year ended December 31, 1999 compared to year ended
December 31, 1998
Total revenue decreased 9.0% to $1,920,000 from $2,110,000 in 1998, primarily
due to a 12.6% decrease in income from the Olinda Project to $1,792,000 from
$2,050,000 in 1998. The decrease in income from the Olinda Project was a result
of higher maintenance costs and was partially offset by $59,000 of income from
the two mobile power modules acquired in August 1999.
Total expenses increased by $440,000 (299.3%) to $587,000 from $147,000 in 1998.
The primary cause of the increase was a writedown in 1999 of the Trust's note
receivable from the sale of the South Boston Project. All other 1999 Trust
expenses were comparable to those of 1998.
Results of Operations Year ended December 31, 1998 compared to year ended
December 31, 1997
Total revenue increased 8.7% to $2,110,000 in 1998 from $1,941,000 in 1997, due
to a 19.2% increase in income from the Olinda Project to $2,050,000 in 1998 from
$1,720,000 in 1997. The increase is a result of the Trust increasing its
investment in the Olinda Project on June 1, 1997 from a 15% cumulative priority
return on its original investment of $3,103,000 to 100% ownership. The increase
in revenue from the Olinda Project was partially offset by the absence of
revenue from the South Boston Project (also known as the Lynchburg Project)
which was sold in 1997. The Trust recorded income of $132,000 from the South
Boston Project in 1997.
Total expenses decreased by $477,000 (76.4%) to $147,000 in 1998 from $624,000
in 1997. The primary cause of the decrease was the absence in 1998 of the
Trust's 1997 write down of its $1,000,000 investment in the Stillwater Project
by $400,000 to its net realizable value of $600,000. Project cash flows from
operating activities at Stillwater have been applied to service project debt
which is senior to the amount due to the Trust. Accounting and legal fees
decreased $95,000 (69.9%) to $41,000 in 1998 from $136,000 in 1997 due to the
reduction in legal fees relating to the Virginia Electric Power Company
("VEPCO") settlement. All other 1998 Trust expenses were comparable to those of
1997.
Liquidity and Capital Resources
In 1999, the balance of cash and cash equivalents did not change significantly,
reflecting that cash from operations of $1,315,000 was approximately equal to
distributions to shareholders of $1,311,000. The cash from operations includes a
deduction for two Caterpillar power modules purchased in 1999 for $710,000. The
Trust rents the power modules to domestic and international customers.
Distributions to shareholders did not change significantly, decreasing 1% to
$1,311,000 in 1999 from $1,324,000 in 1998.
On June 6, 1997, Brea entered into a revolving credit agreement with Fleet Bank,
N.A. (the "Bank") whereby the Bank provided a five year committed line of credit
facility of $750,000 which decreases by $100,000 on each anniversary of the
facility. Outstanding borrowings bear interest at the Bank's prime rate or, at
Brea's choice, at LIBOR plus 2.5%. At December 31, 1999 and 1998, there were no
borrowings outstanding under the credit facility. The credit agreement requires
Brea to maintain a ratio of total debt to tangible net worth of no more than 1
to 1. The Trust guaranteed the obligations of Brea under the credit facility.
Obligations of the Trust are generally limited to making distributions to
shareholders of available operating cash flow generated by its investments,
payment of the management fee to the Managing Shareholder and payment of certain
accounting and legal services to third parties. The Trust's policy is to
distribute to shareholders as much cash as is prudent.
The Trust anticipates that its cash flow from operations during 2000 will be
adequate to fund its obligations.
Year 2000 Remediation.
The Managing Shareholder and its affiliates began year 2000 review and
planning in early 1997. After initial remediation was completed, a more
intensive review discovered additional issues and the Managing Shareholder began
a formal remediation program in late 1997. All remediation and testing were
completed by October 31, 1999 and no material malfunctions have occurred or been
discovered through March 30, 2000.
The accounting, network and financial packages for the Ridgewood companies
were basically off-the-shelf packages that were remediated, where necessary, by
obtaining patches or updated versions. The Managing Shareholder estimates that
the Trust's allocable portion of the cost of those upgrades is approximately
$200.
The Managing Shareholder has two major systems affecting the Trust that
rely on custom-written software, the subscription/investor relations and
investor distribution systems, which maintain individual investor records and
effect disbursement of distributions to Investors. These were remediated during
1999, including the elements of those systems used to generate internal sales
reports and other internal reports. Although these were not designated
mission-critical, they were also successfully remediated by October 31, 1999.
Some sub-systems were remediated using the "sliding window" technique, in which
two digit years less than a threshold number are assumed to be in the 2000's and
higher two digit numbers are assumed to be in the 1900's. Although this will
allow compliance for several years beyond the year 2000, eventually those
systems will have to be rewritten again or replaced. The Managing Shareholder
expects that the ordinary course of system upgrading will eventually cure this
problem.
The Trust's share of the incremental cost for Year 2000 remediation of this
custom written software and related items for 1998 and prior years was
approximately $3,000 and was approximately $2,800 for 1999.
The Olinda electric generating facilities were reviewed by personnel from
RRPMCo to determine if its electronic control systems contain software affected
by the Year 2000 problem or contain embedded components that contain Year 2000
flaws. None were found. To date the Trust has discovered no systems having a
material impact on output, environmental compliance, recordkeeping or any other
material impact that have Year 2000 concerns. The Trust's share of the costs of
the consultant's review and of any minor upgrades or rehabilitation was less
than $25,000.
The Managing Shareholder and its affiliates do not significantly rely on
computer input from suppliers and customers and thus are not directly affected
by other companies' year 2000 compliance. No material adverse effects from
customers' or suppliers' year 2000 non-compliance have occurred.
Based on its internal evaluations and the risks and contexts identified
by the Commission in its rules and interpretations, the Trust believes that Year
2000 issues relating to its assets and remediation program will not have a
material effect on its facilities, financial position or operations, and that
the costs of addressing the Year 2000 issues will not have a material effect on
its future consolidated operating results, financial condition or cash flows.
However, this belief is based upon current information, and there can be no
assurance that unanticipated problems will not occur or be discovered that would
result in material adverse effects on the Trust.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Qualitative Information About Market Risk.
The Trust's investments in financial instruments are short-term investments
of working capital or excess cash. Those short-term investments are limited by
its Declaration of Trust to investments in United States government and agency
securities or to obligations of banks having at least $5 billion in assets.
Because the Trust invests only in short-term instruments for cash management,
its exposure to interest rate changes is low. The Trust has limited exposure to
trade accounts receivable and believes that their carrying amounts approximate
fair value.
The Trust's primary market risk exposure is limited interest rate risk
caused by fluctuations in short-term interest rates. The Trust does not
anticipate any changes in its primary market risk exposure or how it intends to
manage it. The Trust does not trade in market risk sensitive instruments.
Quantitative Information About Market Risk
This table provides information about the Trust's financial instruments
that are defined by the Securities and Exchange Commission as market risk
sensitive instruments. These include only short-term U.S. government and agency
securities and bank obligations. The table includes principal cash flows and
related weighted average interest rates by contractual maturity dates.
December 31, 1999
Expected Maturity Date
2000
(U.S. $)
Bank Deposits and Certificates
of Deposit $1,142,009
Average interest rate 5.6%
Item 8. Financial Statements and Supplementary Data.
Index to Financial Statements
Report of Independent Accountants F-2
Balance Sheet at December 31, 1999 and 1998 F-3
Statement of Operations for the three years ended
December 31, 1999 F-4
Statement of Changes in Shareholders' Equity
for the three years ended December 31, 1999 F-5
Statement of Cash Flows for the three years
ended December 31, 1999 F-6
Notes to Financial Statements F-7 to F-10
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
The financial statements are presented in accordance with generally
accepted accounting principles and Securities and Exchange Commission positions
applicable to business investment companies, which require the Trust's
investments in Projects to be presented on the cash method, rather than on the
equity method.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Neither the Trust nor the Managing Shareholder has had an independent
accountant resign or decline to continue providing services since their
respective inceptions and neither has dismissed an independent accountant during
that period. During that period of time no new independent accountant has been
engaged by the Trust or the Managing Shareholder, and the Managing Shareholder's
current accountants, PricewaterhouseCoopers LLP, have been engaged by the Trust.
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) General.
As Managing Shareholder of the Trust, Ridgewood Power LLC has direct and
exclusive discretion in management and control of the affairs of the Trust
(subject to the general supervision and review of the Independent Trustees and
the Managing Shareholder acting together as the Board of the Trust). The
Managing Shareholder will be entitled to resign as Managing Shareholder of the
Trust only (i) with cause (which cause does not include the fact or
determination that continued service would be unprofitable to the Managing
Shareholder) or (ii) without cause with the consent of a majority in interest of
the Investors. It may be removed from its capacity as Managing Shareholder as
provided in the Declaration.
Ridgewood Holding, which was incorporated in April 1992, is the Corporate
Trustee of the Trust.
(b) Managing Shareholder.
Ridgewood Power Corporation was incorporated in February 1991 as a Delaware
corporation for the primary purpose of acting as a managing shareholder of
business trusts and as a managing general partner of limited partnerships which
are organized to participate in the development, construction and ownership of
Independent Power Projects. It organized the Trust and acted as managing
shareholder until April 1999. On or about April 21, 1999 it was merged into the
current Managing Shareholder, Ridgewood Power LLC. Ridgewood Power LLC was
organized in early April 1999 and has no business other than acting as the
successor to Ridgewood Power Corporation. Robert E. Swanson has been the
President, sole director and sole stockholder of Ridgewood Power Corporation
since its inception in February 1991 and is now the controlling member, sole
manager and President of the Managing Shareholder. All of the equity in the
Managing Shareholder is or will be owned by Mr. Swanson or by family trusts. Mr.
Swanson has the power on behalf of those trusts to vote or dispose of the
membership equity interests owned by them.
The Managing Shareholder has also organized Ridgewood Electric Power Trust
II ("Ridgewood Power II"), Ridgewood Electric Power Trust II ("Ridgewood Power
II"), Ridgewood Electric Power Trust IV ("Ridgewood Power IV"), Ridgewood
Electric Power Trust V ("Ridgewood Power V") and The Ridgewood Power Growth Fund
(the "Growth Fund") as Delaware business trusts to participate in the
independent power industry. Ridgewood Power LLC is now also their managing
shareholder. The business objectives of these five trusts are similar to those
of the Trust.
A number of other companies are affiliates of Mr. Swanson and Ridgewood
Power. Each of these also was organized as a corporation that was wholly-owned
by Mr. Swanson. In April 1999, most of them were merged into limited liability
companies with similar names and Mr. Swanson became the sole manager and
controlling owner of each limited liability company. For convenience, the
remainder of this Memorandum will discuss each limited liability company and its
corporate predecessor as a single entity.
The Managing Shareholder is an affiliate of Ridgewood Energy
Corporation("Ridgewood Energy"), which has organized and operated 48 limited
partnership funds and one business trust over the last 18 years (of which 25
have terminated) and which had total capital contributions in excess of $190
million. The programs operated by Ridgewood Energy have invested in oil and
natural gas drilling and completion and other related activities. Other
affiliates of the Managing Shareholder include Ridgewood Securities LLC
("Ridgewood Securities"), an NASD member which has been the placement agent for
the private placement offerings of the six trusts sponsored by the Managing
Shareholder and the funds sponsored by Ridgewood Energy; Ridgewood Capital
Management LLC ("Ridgewood Capital"), which assists in offerings made by the
Managing Shareholder and which is the sponsor of four privately offered venture
capital funds (the Ridgewood Capital Venture Partners and Ridgewood Capital
Venture Partners II funds); Ridgewood Power VI LLC ("Power VI"), which is a
managing shareholder of the Growth Fund, and RPMCo. Each of these companies is
controlled by Robert E. Swanson, who is their sole director or manager.
Set forth below is certain information concerning Mr. Swanson and other
executive officers of the Managing Shareholder.
Robert E. Swanson, age 53, has also served as President of the Trust since
its inception in 1991 and as President of RPMCo, Ridgewood Power II, Ridgewood
Power III, Ridgewood Power IV, Ridgewood Power V and the Growth Fund, since
their respective inceptions. Mr. Swanson has been President and registered
principal of Ridgewood Securities and became the Chairman of the Board of
Ridgewood Capital on its organization in 1998. He also is Chairman of the Board
of the Ridgewood Capital Venture Partners I and II venture capital funds. In
addition, he has been President and sole stockholder of Ridgewood Energy since
its inception in October 1982. Prior to forming Ridgewood Energy in 1982, Mr.
Swanson was a tax partner at the former New York and Los Angeles law firm of
Fulop & Hardee and an officer in the Trust and Investment Division of Morgan
Guaranty Trust Company. His specialty is in personal tax and financial planning,
including income, estate and gift tax. Mr. Swanson is a member of the New York
State and New Jersey bars, the Association of the Bar of the City of New York
and the New York State Bar Association. He is a graduate of Amherst College and
Fordham University Law School.
Robert L. Gold, age 41, has served as Executive Vice President of the
Managing Shareholder, RPMCo, the Trust, Ridgewood Power II, Ridgewood Power III,
Ridgewood Power IV, Ridgewood Power V and the Growth Fund since their respective
inceptions, with primary responsibility for marketing and acquisitions. He has
been President of Ridgewood Capital since its organization in 1998. As such, he
is President of the Ridgewood Capital Venture Partners I and II funds. He has
served as Vice President and General Counsel of Ridgewood Securities Corporation
since he joined the firm in December 1987. Mr. Gold has also served as Executive
Vice President of Ridgewood Energy since October 1990. He served as Vice
President of Ridgewood Energy from December 1987 through September 1990. For the
two years prior to joining Ridgewood Energy and Ridgewood Securities, Mr. Gold
was a corporate attorney in the law firm of Cleary, Gottlieb, Steen & Hamilton
in New York City where his experience included mortgage finance, mergers and
acquisitions, public offerings, tender offers, and other business legal matters.
Mr. Gold is a member of the New York State bar. He is a graduate of Colgate
University and New York University School of Law.
Thomas R. Brown, age 45, joined the Managing Shareholder in November 1994
as Senior Vice President and holds the same position with the Trust, RPMCo and
each of the other trusts sponsored by the Managing Shareholder. He became Chief
Operating Officer of the Managing Shareholder, RPMCo and the Ridgewood Power I
through V trusts in October 1996, and is the Chief Operating Officer of the
Growth Fund. Mr. Brown has over 20 years' experience in the development and
operation of power and industrial projects. From 1992 until joining the Managing
Shareholder he was employed by Tampella Services, Inc., an affiliate of
Tampella, Inc., one of the world's largest manufacturers of boilers and related
equipment for the power industry. Mr. Brown was Project Manager for Tampella's
Piney Creek project, a $100 million bituminous waste coal fired circulating
fluidized bed power plant. Between 1990 and 1992 Mr. Brown was Deputy Project
Manager at Inter-Power of Pennsylvania, where he successfully developed a 106
megawatt coal fired facility. Between 1982 and 1990 Mr. Brown was employed by
Pennsylvania Electric Company, an integrated utility, as a Senior Thermal
Performance Engineer. Prior to that, Mr. Brown was an Engineer with Bethlehem
Steel Corporation. He has an Bachelor of Science degree in Mechanical
Engineering from Pennsylvania State University and an MBA in Finance from the
University of Pennsylvania. Mr. Brown satisfied all requirements to earn the
Professional Engineer designation in 1985.
Martin V. Quinn, age 53, assumed the duties of Chief Financial Officer of
the Managing Shareholder, the Trust, four other trusts organized by the Managing
Shareholder and RPMCo in November 1996 under a consulting arrangement. He became
a full-time officer of the Managing Shareholder and RPMCo in April 1997 and is
now also Chief Financial Officer of the Growth Fund. He is also the Chief
Financial Officer of Ridgewood Capital and of the Ridgewood Capital Venture
Partners I and II funds.
Mr. Quinn has 32 years of experience in financial management and corporate
mergers and acquisitions, gained with major, publicly-traded companies and an
international accounting firm. He formerly served as Vice President of Finance
and Chief Financial Officer of NORSTAR Energy, an energy services company, from
February 1994 until June 1996. From 1991 to March 1993, Mr. Quinn was employed
by Brown-Forman Corporation, a diversified consumer products company and
distiller, where he was Vice President-Corporate Development. From 1981 to 1991,
Mr. Quinn held various officer-level positions with NERCO, Inc., a mining and
natural resource company, including Vice President- Controller and Chief
Accounting Officer for his last six years and Vice President-Corporate
Development. Mr. Quinn's professional qualifications include his certified
public accountant qualification in New York State, membership in the American
Institute of Certified Public Accountants, six years of experience with the
international accounting firm of PricewaterhouseCoopers LLP, and a Bachelor of
Science degree in Accounting and Finance from the University of Scranton (1969).
Mary Lou Olin, age 47, has served as Vice President of the Managing
Shareholder, RPMCo, Ridgewood Capital, the Trust, Ridgewood Power II, Ridgewood
Power III, Ridgewood Power IV, Ridgewood Power V and the Growth Fund since their
respective inceptions. She has also served as Vice President of Ridgewood Energy
since October 1984, when she joined the firm. Her primary areas of
responsibility are investor relations, communications and administration. Prior
to her employment at Ridgewood Energy, Ms. Olin was a Regional Administrator at
McGraw-Hill Training Systems where she was employed for two years. Prior to
that, she was employed by RCA Corporation. Ms. Olin has a Bachelor of Arts
degree from Queens College.
(c) Management Agreement.
The Trust has entered into a Management Agreement with the Managing
Shareholder, its Managing Shareholder, detailing how the Managing Shareholder
will render management, administrative and investment advisory services to the
Trust. Specifically, the Managing Shareholder will perform (or arrange for the
performance of) the management and administrative services required for the
operation of the Trust. Among other services, it will administer the accounts
and handle relations with the Investors, provide the Trust with office space,
equipment and facilities and other services necessary for its operation and
conduct the Trust's relations with custodians, depositories, accountants,
attorneys, brokers and dealers, corporate fiduciaries, insurers, banks and
others, as required.
The Managing Shareholder will also be responsible for making investment and
divestment decisions, subject to the provisions of the Declaration. The Managing
Shareholder will be obligated to pay the compensation of the personnel and all
administrative and service expenses necessary to perform the foregoing
obligations. The Trust will pay all other expenses of the Trust, including
transaction expenses, valuation costs, expenses of preparing and printing
periodic reports for Investors and the Commission, postage for Trust mailings,
Commission fees, interest, taxes, legal, accounting and consulting fees,
litigation expenses and other expenses properly payable by the Trust. The Trust
will reimburse the Managing Shareholder for all such Trust expenses paid by it.
As compensation for the Managing Shareholder's performance under the
Management Agreement, the Trust is obligated to pay the Managing Shareholder an
annual management fee described below at Item 13 -- Certain Relationships and
Related Transactions.
The Board of the Trust (including both initial Independent Trustees) have
approved the initial Management Agreement and its renewals. Each Investor
consented to the terms and conditions of the initial Management Agreement by
subscribing to acquire Investor Shares in the Trust. The Management Agreement
will remain in effect until January 4, 2001 [assumes approval by board] and year
to year thereafter as long as it is approved at least annually by (i) either the
Board of the Trust or a majority in interest of the Investors and (ii) a
majority of the Independent Trustees. The agreement is subject to termination at
any time on 60 days' prior notice by the Board, a majority in interest of the
Investors or the Managing Shareholder. The agreement is subject to amendment by
the parties with the approval of (i) either the Board or a majority in interest
of the Investors and (ii) a majority of the Independent Trustees.
(d) Executive Officers of the Trust.
Pursuant to the Declaration, the Managing Shareholder has appointed
officers of the Trust to act on behalf of the Trust and sign documents on behalf
of the Trust as authorized by the Managing Shareholder. Mr. Swanson has been
named the President of the Trust and the other principal officers of the Trust
are identical to those of the Managing Shareholder.
The officers have the duties and powers usually applicable to similar
officers of a Delaware business corporation in carrying out Trust business.
Officers act under the supervision and control of the Managing Shareholder,
which is entitled to remove any officer at any time. Unless otherwise specified
by the Managing Shareholder, the President of the Trust has full power to act on
behalf of the Trust. The Managing Shareholder expects that most actions taken in
the name of the Trust will be taken by Mr. Swanson and the other principal
officers in their capacities as officers of the Trust under the direction of the
Managing Shareholder rather than as officers of the Managing Shareholder.
(e) The Trustees.
The 1940 Act requires the Independent Trustees to be individuals who are
not "interested persons" of the Trust as defined under the 1940 Act (generally,
persons who are not affiliated with the Trust or with affiliates of the Trust).
There must always be at least two Independent Trustees; a larger number may be
specified by the Board from time to time. Each Independent Trustee has an
indefinite term. Vacancies in the authorized number of Independent Trustees will
be filled by vote of the remaining Board members so long as there is at least
one Independent Trustee; otherwise, the Managing Shareholder must call a special
meeting of Investors to elect Independent Trustees. Vacancies must be filled
within 90 days. An Independent Trustee may resign effective on the designation
of a successor and may be removed for cause by at least two-thirds of the
remaining Board members or with or without cause by action of the holders of at
least two-thirds of Shares held by Investors. Under the Declaration, the
Independent Trustees are authorized to act only where their consent is required
under the 1940 Act and to exercise a general power to review and oversee the
Managing Shareholder's other actions. They are under a fiduciary duty similar to
that of corporation directors to act in the Trust's best interest and are
entitled to compel action by the Managing Shareholder to carry out that duty, if
necessary, but ordinarily they have no duty to manage or direct the management
of the Trust outside their enumerated responsibilities.
The Independent Trustees of the Trust are John C. Belknap, Dr. Richard D.
Propper and Seymour Robin. Mr. Belknap, Dr. Propper and Mr. Robin also serve as
independent trustees for Ridgewood Power IV and the Growth Fund. Set forth below
is certain information concerning these individuals, who are not otherwise
affiliated with the Trust, the Managing Shareholder or their directors, officers
or agents.
John C. Belknap, age 53, has been chief financial officer of three national
retail chains and their parent companies. He currently is an independent
financial consultant associated with Dr. Propper. From July 1997 to [August
1999], he was Executive Vice President and Chief Financial Officer of Richfood
Holdings, Inc., a Virginia-based food manufacturer. From December 1995 to June
1997 Mr. Belknap was Executive Vice President and Chief Financial Officer of
OfficeMax, Inc., a national chain of office supply stores. From February 1994 to
February 1995, Mr. Belknap was Executive Vice President and Chief Financial
Officer of Zale Corporation, a 1,200 store jewelry retail chain. From January
1990 to January 1994 and from February 1995 to December 1995, Mr. Belknap was an
independent financial consultant. From January 1989 through May 1993 he aso
served as a director of and consultant to Finlay Enterprises, Inc., an operator
of leased fine jewelry departments in major department stores nationwide. Prior
to 1989, Mr. Belknap served as Chief Financial Officer of Seligman & Latz, Kay
Corporation and its subsidiary, Kay Jewelers, Inc.
From January 1990 until February 1994, Mr. Belknap consulted in a variety
of strategic corporate transactions, including mergers and acquisitions,
divestitures and refinancing. One such transaction involved the recapitalization
and change of control of Finlay in May 1993. From 1979 to 1985, Mr. Belknap
served as Chief Financial Officer of Kay Corporation ("Kay"), the parent of Kay
Jewelers, Inc. ("KJI"), a national chain of jewelry stores and leased jewelry
departments in major department stores. He served as Chief Financial Officer of
KJI from 1974 to 1979 and as its Assistant Controller from 1973 to 1974. Between
1970 and 1973, Mr. Belknap was a senior auditor at Arthur Young & Company (now
Ernst & Young), a national accounting firm. Mr. Belknap earned BA and MBA
degrees from Cornell University.
Dr. Richard D. Propper, age 51, graduated from McGill University in 1969
and received his medical degree from Stanford University in 1972. He completed
his internship and residency in Pediatrics in 1974, and then attended Harvard
University for post doctoral training in hematology/oncology. Upon the
completion of such training, he joined the staff of the Harvard Medical School
where he served as an assistant professor until 1983. In 1983, Dr. Propper left
academic medicine to found Montgomery Medical Ventures, one of the largest
medical technology venture capital firms in the United States. He served as
managing general partner of Montgomery Medical Ventures until 1993.
Dr. Propper is currently a consultant to a variety of companies for medical
matters, including international opportunities in medicine. In June 1996 Dr.
Propper agreed to an order of the Commission that required him to make filings
under Sections 13(d) and (g) and 16 of the 1934 Act and that imposed a civil
penalty of $15,000. In entering into that agreement, Dr. Propper did not admit
or deny any of the alleged failures to file recited in that order. Dr. Propper
is also an acquisition consultant for Ridgewood Capital Venture Partners, LLC
and Ridgewood Institutional Venture Partners, LLC, the first two venture capital
funds sponsored by Ridgewood Capital. He receives a fixed consulting fee from
those funds and contingent compensation from Ridgewood Capital.
Seymour (Si) Robin, age [72], has been the Executive Vice President and
CEO of Sensor Systems, Inc., an antenna manufacturing company located in
Chatsworth, California. He has held this position since 1972. From 1949 to 1953,
he owned and operated United Manufacturing Company, which specialized in
aircraft and missile antennas. From 1953 to 1957, he managed Bendix Antenna
Division, which specialized in aircraft and space antennas and avionics. In
1957, he started SRA Antenna Company as a manufacturer and technical consultant
to worldwide manufacturers or commercial and military aircraft and space
vehicles. He remained at SRA Antenna Company until 1971, at which time he became
Executive Vice President and CEO of Sensor Systems, Inc.
Mr. Robin holds degrees in mechanical and electrical engineering from
Montreal Technical Institute and U.C.L.A. He is an FAA-certified pilot
(multi-engine, instrument, land and sea ratings) since 1966. He has received the
AMC Airline Voltaire Award for the Most Outstanding Contribution to Airline
Avionics in the Past 50 Years. He also owns significant interests in commercial
and residential real estate in the southwest U.S. Mr. Robin was elected as an
Independent Trustee by the two other Independent Trustees and Mr. Swanson in
January 2000. He also serves as an Independent Trustee of Trust IV and of the
Growth Fund.
The Corporate Trustee of the Trust is Ridgewood Holding. Legal title to
Trust Property will be in the name of the Trust if possible or Ridgewood Holding
as trustee. Ridgewood Holding is also a trustee of Ridgewood Power II - V and
the Growth Fund and of an oil and gas business trust sponsored by Ridgewood
Energy and is expected to be a trustee of other similar entities that may be
organized by the Managing Shareholder and Ridgewood Energy. The President and
sole stockholder of Ridgewood Holding is Robert E. Swanson; its other executive
officers are identical to those of the Managing Shareholder. See -Managing
Shareholder. The principal office of Ridgewood Holding is at 1105 North Market
Street, Suite 1300, Wilmington, Delaware 19899.
The Trustees are not liable to persons other than Shareholders for the
obligations of the Trust.
The Trust has relied and will continue to rely on the Managing Shareholder
and engineering, legal, investment banking and other professional consultants
(as needed) and to monitor and report to the Trust concerning the operations of
Projects in which it invests, to review proposals for additional development or
financing, and to represent the Trust's interests. The Trust will rely on such
persons to review proposals to sell its interests in Projects in the future.
(f) Section 16(a) Beneficial Ownership Reporting Compliance
All individuals subject to the requirements of Section 16(a) have complied with
those reporting requirements during 1999.
(g) RPMCo.
As discussed above at Item 1 - Business, RPMCo assumed day-to-day
management responsibility for the Olinda Project, effective June 1, 1997. Like
the Managing Shareholder, RPMCo is wholly owned by Robert E. Swanson. It entered
into an "Operation Agreement" with the Trust's subsidiary that owns the Project,
effective June 1, 1997, under which RPMCo, under the supervision of the Managing
Shareholder, will provide the management, purchasing, engineering, planning and
administrative services for the Olinda Project. RPMCo will charge the Trust at
its cost for these services and for the Trust's allocable amount of certain
overhead items. RPMCo shares space and facilities with the Managing Shareholder
and its affiliates. To the extent that common expenses can be reasonably
allocated to RPMCo, the Managing Shareholder may, but is not required to, charge
RPMCo at cost for the allocated amounts and such allocated amounts will be borne
by the Trust and other programs. Common expenses that are not so allocated will
be borne by the Managing Shareholder.
Initially, the Managing Shareholder does not anticipate charging RPMCo for
the full amount of rent, utility supplies and office expenses allocable to
RPMCo. As a result, both initially and on an ongoing basis the Managing
Shareholder believes that RPMCo's charges for its services to the Trust are
likely to be materially less than its economic costs and the costs of engaging
comparable third persons as managers. RPMCo will not receive any compensation in
excess of its costs.
Allocations of costs will be made either on the basis of identifiable
direct costs, time records or in proportion to each program's investments in
Projects managed by RPMCo; and allocations will be made in a manner consistent
with generally accepted accounting principles.
RPMCo will not provide any services related to the administration of the
Trust, such as investment, accounting, tax, investor communication or regulatory
services, nor will it participate in identifying, acquiring or disposing of
Projects. RPMCo will not have the power to act in the Trust's name or to bind
the Trust, which will be exercised by the Managing Shareholder or the Trust's
officers.
The Operation Agreement does not have a fixed term and is terminable by
RPMCo, by the Managing Shareholder or by vote of a majority in interest of
Investors, on 60 days' prior notice. The Operation Agreement may be amended by
agreement of the Managing Shareholder and RPMCo; however, no amendment that
materially increases the obligations of the Trust or that materially decreases
the obligations of RPMCo shall become effective until at least 45 days after
notice of the amendment, together with the text thereof, has been given to all
Investors.
The executive officers of RPMCo are Mr. Swanson (President), Mr. Gold
(Executive Vice President), Mr. Brown (Senior Vice President and Chief Operating
Officer), Mr. Quinn (Senior Vice President and Chief Financial Officer) and Ms.
Olin (Vice President). Douglas V. Liebschner, Vice President - Operations, is a
key employee.
Douglas V. Liebschner, age 53, joined RPMCo in June 1996 as Vice President
of Operations. He has over 28 years of experience in the operation and
maintenance of power plants. From 1992 until joining RPMCo, he was employed by
Tampella Services, Inc., an affiliate of Tampella, Inc., one of the world's
largest manufacturers of boilers and related equipment for the power industry.
Mr. Liebschner was Operations Supervisor for Tampella's Piney Creek project, a
$100 million bituminous waste coal fired circulating fluidized bed ("CFB") power
plant. Between 1989 and 1992, he supervised operations of a waste to energy
plant in Poughkeepsie, N.Y. and an anthracite-waste-coal-burning CFB in
Frackville, Pa. From 1969 to 1989, Mr. Liebschner served in the U.S. Navy,
retiring with the rank of Lieutenant Commander. While in the Navy, he served
mainly in billets dealing with the operation, maintenance and repair of ship
propulsion plants, twice serving as Chief Engineer on board U.S. Navy combatant
ships. He has a Bachelor of Science degree from the U.S. Naval Academy,
Annapolis, Md.
Item 11. Executive Compensation.
Through 1995, the executive officers of the Trust and the Managing
Shareholder were compensated by Ridgewood Energy. The Trust was not charged for
their compensation; the Managing Shareholder remitted a portion of the fees paid
to it by the Trust to reimburse Ridgewood Energy for employment costs incurred
on Ridgewood Power's business. In 1996 and future years, the Managing
Shareholder compensates its officers without additional payments by the Trust
and will be reimbursed by Ridgewood Energy for costs related to Ridgewood
Energy's business. The Trust will reimburse RPMCo at cost for services provided
by RPMCo's employees; no such reimbursement per employee exceeded $60,000 in
1999 and 1998. Information as to the fees payable to the Managing Shareholder
and certain affiliates is contained at Item 13 - Certain Relationships and
Related Transactions.
As compensation for services rendered to the Trust, pursuant to the
Declaration, each Independent Trustee is entitled to be paid by the Trust the
sum of $5,000 annually and to be reimbursed for all reasonable out-of-pocket
expenses relating to attendance at Board meetings or otherwise performing his
duties to the Trust. Accordingly in January 1995 and following years the Trust
paid each Independent Trustee $5,000 for his services. The Board of the Trust is
entitled to review the compensation payable to the Independent Trustees annually
and increase or decrease it as the Board sees reasonable. The Trust is not
entitled to pay the Independent Trustees compensation for consulting services
rendered to the Trust outside the scope of their duties to the Trust without
prior Board approval.
Ridgewood Holding, the Corporate Trustee of the Trust, is not entitled to
compensation for serving in such capacity, but is entitled to be reimbursed for
Trust expenses incurred by it which are properly reimbursable under the
Declaration.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Trust sold 105.5 Investor Shares (approximately $10.5 million of gross
proceeds) of beneficial interest in the Trust pursuant to a private placement
offering under Rule 506 of Regulation D under the Securities Act. The offering
closed on March 31, 1992. Further details concerning the offering are set forth
above at Item 1-- Business. No person beneficially owns 5% or more of the
Investor Shares.
Ridgewood Power, the Managing Shareholder of the Trust, purchased for cash
in the offering 1 Investor Share, equal to .9 of 1% of the outstanding Investor
Shares, and Mr. Swanson purchased an additional 2.1 Investor Shares. By virtue
of its purchase of that Investor Share, Ridgewood Power is entitled to the same
ratable interest in the Trust as all other purchasers of Investor Shares. No
other Trustees or executive officers of the Trust acquired Investor Shares in
the Trust's offering.
Ridgewood Power was issued one Management Share in the Trust representing
the beneficial interests and management rights of Ridgewood Power in its
capacity as the Managing Shareholder (excluding its interest in the Trust
attributable to Investor Shares it acquired in the offering). The management
rights of Ridgewood Power are described in further detail above at Item 1 -
Business and in Item 10 - Directors and Executive Officers of the Registrant.
Its beneficial interest in cash distributions of the Trust and its allocable
share of the Trust's net profits and net losses and other items attributable to
the Management Share are described in further detail below at Item 13. Certain
Relationships and Related Transactions.
Item 13. Certain Relationships and Related Transactions.
The Declaration provides that cash flow of the Trust, less reasonable
reserves which the Trust deems necessary to cover anticipated Trust expenses, is
to be distributed to the Investors and the Managing Shareholder (collectively,
the "Shareholders"), from time to time as the Trust deems appropriate. Prior to
Payout (the point at which Investors have received cumulative distributions
equal to the amount of their capital contributions), each year all distributions
from the Trust, other than distributions of the revenues from dispositions of
Trust Property, are to be allocated 99% to the Investors and 1% to the Managing
Shareholder until Investors have received annual distributions equal to 15% of
their Capital Contributions (a "15% Priority Distribution") and thereafter any
remaining distributions will be allocated 80% to the Investors and 20% to the
Managing Shareholder. Revenues from dispositions of Trust Property are to be
distributed 99% to Investors and 1% to the Managing Shareholder until Payout. In
all cases, after Payout, Investors are to be allocated 80% of all distributions
and the Managing Shareholder 20%.
For any fiscal period, the Trust's net profits, if any, other than those
derived from dispositions of Trust Property, are allocated 99% to the Investors
and 1% to the Managing Shareholder until the profits so allocated offset (1) the
aggregate 15% Priority Distribution to all Investors and (2) any net losses from
prior periods that had been allocated to the Shareholders. Any remaining net
profits, other than those derived from dispositions of Trust Property, are
allocated 80% to the Investors and 20% to the Managing Shareholder. If the Trust
realizes net losses for the period, the losses are allocated 80% to the
Investors and 20% to the Managing Shareholder until the losses so allocated
offset any net profits from prior periods allocated to the Shareholders. Any
remaining net losses are allocated 99% to the Investors and 1% to the Managing
Shareholder. Revenues from dispositions of Trust Property are allocated in the
same manner as distributions from such dispositions. Amounts allocated to the
Investors are apportioned among them in proportion to their capital
contributions.
On liquidation of the Trust, the remaining assets of the Trust after
discharge of its obligations, including any loans owed by the Trust to the
Shareholders, will be distributed, first, 99% to the Investors and the remaining
1% to the Managing Shareholder, until Payout, and any remainder will be
distributed to the Shareholders in proportion to their capital accounts.
In 1999 and 1998, the Trust made distributions to the Managing Shareholder
(which is a member of the Board of the Trust) as stated at Item 5 - Market for
Registrant's Common Equity and Related Stockholder Matters. In addition, the
Trust and its subsidiaries paid fees and reimbursements to the Managing
Shareholder and its affiliates as follows:
Fee Paid to 1999 1998 1997 1996 1995
Management fee Managing $76,331 $69,931 $67,483 $49,255 $86,510
Shareholder
Cost
reimbursements RPMCo 1,912,474 1,771,554 1,853,994 1,098,910 0
These included all payroll, fuel and other expenses of operating the South
Boston and Olinda Projects and an allocable portion of RPMCo overhead. These
costs are paid by the Projects and do not appear in the Trust's financial
statements.
The management fee, payable monthly under the Management Agreement at the
annual rate of 1% of the Trust's net asset value (until June 1994, of the
Trust's total capital contributions), began on the closing of the offering and
compensates the Managing Shareholder for certain management, administrative and
advisory services for the Trust. In addition to the foregoing, the Trust
reimbursed the Managing Shareholder at cost for expenses and fees of
unaffiliated persons engaged by the Managing Shareholder for Trust business and
for payroll and other costs of operation of the Trust's Projects. The
reimbursements to RPMCo, which do not exceed its actual costs, are described at
Item 10(f) - Directors and Executive Officers of the Registrant -- RPMCo.
In addition to the foregoing, the Trust reimbursed the Managing Shareholder
at cost for expenses and fees of unaffiliated persons engaged by the Managing
Shareholder for Trust business and in years before 1996 for payroll and other
costs of operation of the South Boston Project. In 1996, these reimbursements
were paid to RPMCo. The reimbursements to RPMCo, which do not exceed its actual
costs, are described at Item 10(f) - Directors and Executive Officers of the
Registrant -- RPMCo.
Other information in response to this item is reported in response to Item
11 -- Executive Compensation, which information is incorporated by reference
into this Item 13.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements.
See the Index to Financial Statements in Item 8 hereof.
(b) Reports on Form 8-K.
No Forms 8-K were filed with the Commission by the Registrant during the
quarter ending December 31, 1999.
(c) Exhibits.
2A. Acquisition Agreement, by and between GSF Energy, L.L.C. and Olinda,
L.L.C., dated as of May 31, 1997. Incorporated by reference to Exhibit 2A in
Registrant's Amendment No. 1 to Current Report on Form 8-K dated June 1, 1997.
2B. Letter, dated as of May 31, 1997, supplementing Acquisition Agreement.
Incorporated by reference to Exhibit 2B in Registrant's Current Report on Form
8-K dated June 1, 1997.
3A. Certificate of Trust of the Registrant is incorporated by reference to
Exhibit 3A of Registrant's Registration Statement which was filed with the
Commission on May 26, 1994.
3B. Declaration of Trust of Registrant is incorporated by reference to
Exhibit 3B of Registrant's Registration Statement which was filed with the
Commission on May 26, 1994.
3C. Agreement of Limited Partnership of Ridgewood Energy Electric Power,
L.P. dated as of March 6, 1991 is incorporated by reference to Exhibit 3C of
Registrant's Registration Statement which was filed with the Commission on May
26, 1994.
10A. Management Agreement between the Registrant and Ridgewood Power
Corporation is incorporated by reference to Exhibit 10A of Registrant's
Registration Statement which was filed with the Commission on May 26, 1994.
10B. Stillwater Hydro Partners L.P. Amended and Restated Agreement of
Limited Partnership dated as of July 29, 1991 and letter of amendment thereof
dated as of May 16, 1994 is incorporated by reference to Exhibit 10B of
Registrant's Registration Statement which was filed with the Commission on May
26, 1994.
10C. Power Purchase Agreement dated as of September 19, 1989 between
Stillwater Hydro Partners L.P. and Niagara Mohawk Power Corporation and
amendment thereof dated as of August 28, 1990 is incorporated by reference to
Exhibit 10C of Registrant's Registration Statement which was filed with the
Commission on May 26, 1994.
10D. RW Power Partners L.P. Agreement and Restated Agreement of Limited
Partnership dated as of October 1, 1992 among Ridgewood Energy Electric Power,
L.P., Ridgewood Power Corporation and WE GEN, Inc. is incorporated by reference
to Exhibit 10D of Registrant's Registration Statement which was filed with the
Commission on May 26, 1994.
10E. [The Registrant has terminated the agreement designated 10E in its
prior Annual Reports on Form 10-K.]
10F. [The Registrant has terminated the agreement designated 10F in its
prior Annual Reports on Form 10-K.]
10G. Agreement of Limited Partnership of Brea Power Partners, L.P. dated as
of October 12, 1994 by and between Brea Power (I), Inc., GSF Energy Inc. and
Ridgewood Electric Power Trust I is incorporated by reference to Registrant's
Form 8-K filed with the Commission on October 27, 1994.
10H. Agreement, dated as of January 16, 1997, by and between RW Power
Partners, L.P. and Virginia Electric Power Company. Incorporated by reference to
Exhibit 10H in the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997.
10I. Amendment to Transaction Documents, dated as of May 31, 1997, by and
among GSF Energy, L.L.C., Brea Power Partners, L.P. and Ridgewood Electric Power
Trust I. Incorporated by reference to Exhibit 10I in Registrant's Amendment No.
1 to Current Report on Form 8-K dated June 1, 1997.
10J. Parallel Generation Agreement, by and between Southern California
Edison Company and GSF Energy, Inc. (Brea Power Partners, L.P., assignee), as
amended. Incorporated by reference to Exhibit 10J in Registrant's Amendment No.
1 to Current Report on Form 8-K dated June 1, 1997.
10K. Partial Assignment and Assumption Agreement, dated as of November 29,
1994, by and between GSF Energy, Inc. and Brea Power Partners, L.P. Incorporated
by reference to Exhibit 10K in Registrant's Amendment No. 1 to Current Report on
Form 8-K dated June 1, 1997.
10L. Amended and Restated Gas Lease Agreement, dated as of December 14,
1993, by and between the County of Orange, California and GSF Energy, Inc., as
modified. Incorporated by reference to Exhibit 10L in Registrant's Amendment No.
1 to Current Report on Form 8-K dated June 1, 1997.
10M. Gas Sale and Purchase Agreement, dated November 29, 1994 by and
between GSF Energy, Inc. and Brea Power Partners, L.P. Incorporated by reference
to Exhibit 10M in Registrant's Amendment No. 1 to Current Report on Form 8-K
dated June 1, 1997.
10N. Support Agreement, dated as of November 29, 1994, by and among Brea
Power Partners, L.P., the Trust and GSF Energy, Inc. Incorporated by reference
to Exhibit 10N in Registrant's Amendment No. 1 to Current Report on Form 8-K
dated June 1, 1997.
Exhibits and schedules to these exhibits are omitted, and lists of the omitted
documents are found in their tables of contents. The Registrant agrees to
furnish supplementally a copy of any omitted exhibit or schedule to these
exhibits to the Commission upon request.
21. Subsidiaries of the Registrant. Page
24. Powers of Attorney Page
27. Financial Data Schedule Page
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Signature Title Date
RIDGEWOOD ELECTRIC POWER TRUST I (Registrant)
By: /s/Robert E. Swanson President and Chief March 30, 2000
Robert E. Swanson Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By: /s/Robert E. Swanson President and Chief March 30, 2000
Robert E. Swanson Executive Officer
By: /s/Martin V. Quinn Senior Vice President and
Martin V. Quinn Chief Financial Officer March 30, 2000
By: /s/Christopher I. Naunton Director of Accounting March 30, 2000
Christopher I. Naunton
RIDGEWOOD POWER LLC Managing Shareholder
By: /s/Robert E. Swanson President March 30, 2000
Robert E. Swanson
/s/Robert E. Swanson * Independent Trustee March 30, 2000
John C. Belknap
/s/Robert E. Swanson * Independent Trustee March 30, 2000
Dr. Richard D. Propper
/s/Robert E. Swanson * Independent Trustee March 30, 2000
Seymour Robin
* As attorney-in-fact for the Independent Trustee
<PAGE>
Ridgewood Electric Power Trust I
Financial Statements
December 31, 1999, 1998 and 1997
<PAGE>
Report of Independent Accountants
To the Shareholders and Trustees of
Ridgewood Electric Power Trust I:
In our opinion, the accompanying balance sheets and the related statements of
operations, changes in shareholders' equity and of cash flows present fairly, in
all material respects, the financial position of Ridgewood Electric Power Trust
I (the "Trust") at December 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As explained in Note 3, the financial statements include investments valued at
$6,583,781 and $6,560,616 (86% of shareholders' equity) as of December 31, 1999
and 1998, respectively, whose values have been estimated by management in the
absence of readily ascertainable market values. We have reviewed the procedures
used by management in arriving at their estimate of value and have inspected
underlying documentation, and, in the circumstances, we believe the procedures
are reasonable and the documentation appropriate. However, because of the
inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market for
the investments existed, and the differences could be material to the financial
statements.
PricewaterhouseCoopers LLP
New York, NY
March 24, 2000
(F2)
<PAGE>
Ridgewood Electric Power Trust I
Balance Sheet
- --------------------------------------------------------------------------------
December 31,
--------------------------
1999 1998
----------- -----------
Assets:
Investments in power generation projects .... $ 6,583,781 $ 6,560,616
Cash and cash equivalents ................... 1,142,009 1,138,102
Due from affiliates ......................... -- 5,342
Other assets ................................ 41,055 6,822
----------- -----------
Total assets ............................... $ 7,766,845 $ 7,710,882
----------- -----------
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued expenses ....... $ 61,116 $ 29,409
Due to affiliates ........................... 50,227 48,670
----------- -----------
Total liabilities .......................... 111,343 78,079
----------- -----------
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (105.5 shares issued and
outstanding) ............................. 7,669,106 7,646,634
Managing shareholder's accumulated deficit .. (13,604) (13,831)
----------- -----------
Total shareholders' equity ................. 7,655,502 7,632,803
----------- -----------
Total liabilities and shareholders' equity . $ 7,766,845 $ 7,710,882
----------- -----------
See accompanying notes to financial statements.
(F3)
<PAGE>
Ridgewood Electric Power Trust I
Statement of Operations
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------
1999 1998 1997
---------- --------- ----------
Revenue:
Income from power generation
projects $1,850,230 $2,049,728 $1,851,763
Interest income ............ 69,746 60,153 89,312
---------- ---------- ----------
Total revenue ............ 1,919,976 2,109,881 1,941,075
---------- ---------- ----------
Expenses:
Accounting and legal fees ... 43,141 41,176 136,347
Management fee .............. 76,331 69,931 67,483
Writedown of power generation
projects ................... 422,019 -- 400,000
Miscellaneous ............... 45,024 35,559 20,448
---------- ---------- ----------
Total expenses ........... 586,515 146,666 624,278
---------- ---------- ----------
Net income ............... $1,333,461 $1,963,215 $1,316,797
---------- ---------- ----------
See accompanying notes to financial statements.
(F4)
<PAGE>
Ridgewood Electric Power Trust I
Statement of Changes in Shareholders' Equity
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
----------- ----------- -----------
Shareholders' equity,
January 1, 1997 ...... $ 6,628,753 $ (24,112) $ 6,604,641
Cash distributions .... (919,012) (9,283) (928,295)
Net income for the year 1,303,629 13,168 1,316,797
----------- ----------- -----------
Shareholders' equity,
December 31, 1997 .... 7,013,370 (20,227) 6,993,143
Cash distributions .... (1,310,319) (13,236) (1,323,555)
Net income for the year 1,943,583 19,632 1,963,215
----------- ----------- -----------
Shareholders' equity,
December 31, 1998 .... 7,646,634 (13,831) 7,632,803
Cash distributions .... (1,297,654) (13,108) (1,310,762)
Net income for the year 1,320,126 13,335 1,333,461
----------- ----------- -----------
Shareholders' equity,
December 31, 1999 .... $ 7,669,106 $ (13,604) $ 7,655,502
----------- ----------- -----------
See accompanying notes to financial statements.
(F5)
<PAGE>
Ridgewood Electric Power Trust I
Statement of Cash Flows
- --------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
Cash flows from operating
activities:
Net income ...................... $ 1,333,461 $ 1,963,215 $ 1,316,797
----------- ----------- -----------
Adjustments to reconcile net
income to net cash flows from
operating activities:
Writedown of power generation
projects ...................... 422,019 -- 400,000
Investments in power generation
projects ...................... (445,184) (4,129) (3,260,437)
Return of investment in power
generation project ............ -- -- 3,259,153
Changes in assets and
liabilities:
Decrease (increase) in due
from affiliates .............. 5,342 (5,342) 345,454
Increase in notes receivable
from the Lynchburg Project ... -- (40,716) (82,066)
(Increase) decrease in other
assets ....................... (34,233) 103,110 (109,932)
Increase (decrease) in accounts
payable and accrued expenses . 31,707 (645,719) 603,979
Increase (decrease) in due to
affiliates ................... 1,557 48,670 (829,407)
----------- ----------- -----------
Total adjustments ............. (18,792) (544,126) 326,744
----------- ----------- -----------
Net cash provided by operating
activities ..................... 1,314,669 1,419,089 1,643,541
----------- ----------- -----------
Cash flows from financing
activities:
Cash distributions to
shareholders ................... (1,310,762) (1,323,555) (928,295)
----------- ----------- -----------
Net cash used in financing
activities ..................... (1,310,762) (1,323,555) (928,295)
----------- ----------- -----------
Net increase in cash and cash
equivalents .................... 3,907 95,534 715,246
----------- ----------- -----------
Cash and cash equivalents,
beginning of year .............. 1,138,102 1,042,568 327,322
----------- ----------- -----------
Cash and cash equivalents,
end of year .................... $ 1,142,009 $ 1,138,102 $ 1,042,568
----------- ----------- -----------
See accompanying notes to financial statements.
(F6)
<PAGE>
Ridgewood Electric Power Trust I
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization and Purpose
Ridgewood Energy Electric Power, L.P. (the "Partnership") was formed as a
Delaware limited partnership on March 6, 1991, by Ridgewood Power LLC
(formerly Ridgewood Power Corporation) acting as the general partner. On
June 15, 1994, with the approval of the partners, the Partnership merged
all of its assets and liabilities into a newly formed trust, called
Ridgewood Electric Power Trust I (the "Trust"). Effective July 25, 1994,
the Trust elected to be treated as a "Business Development Company" ("BDC")
under the Investment Company Act of 1940 and registered its shares under
the Securities Act of 1934. In connection with this transaction, the Trust
issued 105.5 shares in exchange for outstanding Partnership units.
Ridgewood Power LLC is the sole managing shareholder.
The Trust invests in independent power generation facilities and other
power generation assets. These independent power generation facilities
include small power production facilities which produce electricity from
landfill gas and water.
2. Summary of Significant Accounting Policies
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the
estimates.
Investments in power generation projects
The Trust holds investments in power generation projects which are stated
at fair value. Due to the illiquid nature of the investments, the fair
values of the investments are assumed to equal cost, unless currently
available information provides a basis for adjusting the carrying value of
the investments.
Revenue recognition Income from investments is recorded when distributions
are declared. Interest income is recorded as earned.
Cash and cash equivalents
The Trust considers all highly liquid investments with maturities when
purchased of three months or less as cash and cash equivalents.
Income taxes
No provision is made for income taxes in the accompanying financial
statements as the income or losses of the Trust are passed through and
included in the tax returns of the individual shareholders of the Trusts.
3. Investments in Power Generation Projects
The Trust had the following investments in power generation projects:
Fair values as of December 31,
-----------------------
1999 1998
---------- ----------
Brea Power Partners, L.P. ..... $5,273,540 $5,542,101
Ridgewood Mobile Power I, LLC . 710,241 --
RW Power Partners, L.P. ....... -- 418,515
Stillwater Hydro Partners, L.P. 600,000 600,000
---------- ----------
$6,583,781 $6,560,616
---------- ----------
The Trust's distribution income from the projects was as follows:
(F7)
<PAGE>
For the Year Ended December 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
Brea Power Partners, L.P. ... $1,791,167 $2,049,728 $1,720,252
Ridgewood Mobile Power I, LLC 59,063 -- --
RW Power Partners, L.P. ..... -- -- 131,511
---------- ---------- ----------
$1,850,230 $2,049,728 $1,851,763
---------- ---------- ----------
Brea Power Partners, L.P. (known as the Olinda project)
In October 1994, the Trust invested in a limited partnership ("Brea
Partnership"), which acquired a 5 megawatt gas-fired electric generating
facility and related landfill gas processing facility. The facility has
been in continuous operation for 10 years and is located in Olinda,
California.
Prior to June 1, 1997, the Trust was entitled to receive, in any year, the
lesser of the preference amount (as defined in the Partnership Agreement)
or 98% of the annual distribution, plus 25% of the excess of the annual
distribution over the preference amount of the Brea Partnership until the
Trust has received a cumulative 15% return on its original investment.
After such time, the amount the Trust would be entitled to would decrease
to 5% of net cash flows. The Trust received distributions from Brea
Partnership of $162,938 for the five months ended May 31, 1997.
On June 1, 1997, the Trust purchased the general and other limited
partnership interests in Brea and now owns 100% of the Olinda Project. The
purchase price of $2,813,400 included a cash payment to the sellers of
$2,256,500, the assumption of liabilities of $441,100 and acquisition costs
of $115,800. In the second half of 1997, the Trust invested an additional
$661,600 in Brea for working capital. At December 31, 1999 and 1998, The
Trust's total investment in Brea was $5,273,540 and $5,542,101,
respectively. The Trust received distributions from Brea of $1,791,167,
$2,049,728 and $1,557,314 during the years ended December 31, 1999 and 1998
and seven months ended December 31, 1997, respectively, which have been
recorded as income.
Ridgewood Mobile Power I, LLC
Effective August 1999, the Trust, through a subsidiary, acquired two
Caterpillar mobile power modules with a total capacity of 2.35 megawatts
for $710,241. These modules are rented to domestic and international
customers. The Trust pays Hawthorne Power Systems, a California company
that maintains a large fleet of similar rental modules, a fee of 20% of
gross rental revenues to arrange and administer the rental of the units.
For the year ended December 31, 1999, the Trust recorded $59,063 of net
revenue from the units.
RW Power Partners, L.P. (known as the Lynchburg project)
In October 1992, the Trust acquired a limited partnership interest in RW
Power Partners, L.P. ("RWPP") which provided construction funding of a 3
megawatt project using waste oil as its primary fuel source located in
South Boston, Virginia. Commercial operations began in June 1993.
In exchange for its investment, the Trust had the right to receive annually
the greater of either 70% of net profits, as defined, from the limited
partnership or a preferred minimum return of 22.5% on its total investment.
In the event that in any given year all net profits from the limited
partnership did not equal the amount of the preferred minimum return, the
amount of such shortfall would be payable on a priority basis out of any
net profits in subsequent years.
On January 17, 1997, the Trust settled a pending lawsuit between RWPP, and
Virginia Electric Power Company ("VEPCO"). RWPP had sued VEPCO when VEPCO
attempted to cancel the power purchase contract under which VEPCO was
required to purchase electricity generated by RWPP at the Lynchburg
project. Under the settlement, VEPCO paid RWPP $3,750,000 in cash and
waived a claim of $1,800,000 for prepaid capacity payments.
After repayment of $390,836 of intercompany payables, the Trust received
total distributions of $3,390,664 from the Lynchburg Project during the
first quarter of 1997, of which $3,259,153 was recorded as a return of its
investment and $131,511 was recorded as income. RWPP surrendered the power
purchase contract to VEPCO and agreed to the entry of an order dismissing
its lawsuit against VEPCO. The settlement permits RWPP to continue
operating the generating station and the associated waste oil treatment
plant, but RWPP may not sell electricity to VEPCO, except at VEPCO's
request, and RWPP may only sell electricity to investor-owned electric
utilities for resale or use outside VEPCO's service area.
In addition, the facility may be operated for non-generating purposes such
as waste oil treatment and electricity may be generated for the facility's
needs. VEPCO may cut the interconnection of the facility with its lines and
reconnection is permitted only for electricity sales in compliance with the
settlement agreement. RWPP may remove and sell equipment. These restriction
apply to any future owner of the Lynchburg facility.
(F8)
<PAGE>
As a result of the operating restrictions and cancellation of the power
purchase contract included in the VEPCO settlement, the operation of the
Lynchburg Project facilities was suspended in January 1997.
During the fourth quarter of 1997, the Trust sold the Lynchburg Project to
a privately-held, unaffiliated processor of waste oil for $700,000 in the
form of an 8%, seven-year, promissory note, secured by a mortgage on the
Project, and the right of the Trust to receive 2% of the Project's gross
revenues for an indefinite period. Due to the uncertainty surrounding the
Trust's ability to collect the note receivable, the fair value of the
Trust's investment was not adjusted from $290,983 during the first quarter
of 1997. From 1997 to 1999, the Trust provided loans totaling $125,000 to
finance additional capital improvements at the Project, secured by the
mortgage, which were included in the investment balance.
In 1999, the privately held unaffiliated processor ceased operations at the
Lynchburg Project. Operations are not expected to resume and the ability of
the Trust to recover its investment is doubtful. As a result, the Trust
wrote down its investment in the Project to its estimated fair value of
zero and recorded a loss of $422,019.
Stillwater Hydro Partners, L.P.
On October 31, 1991, the Trust acquired a 32.5% general partner's interest
in a limited partnership whose sole business is the construction, ownership
and operation of a 3.5 megawatt hydroelectric facility, located on the
Hudson River in Stillwater, New York (the "Stillwater Project"). At the
time of the investment, the project was under construction and commenced
operations in May 1993. Electricity generated by the Stillwater Project is
sold to Niagara Mohawk Power Corporation under a long-term Power Contract
that expires in 2028.
On May 16, 1994 the Trust, as stipulated in the limited partnership
agreement, elected to exchange its general partner interest for a limited
partnership interest and a priority distribution of available cash flow
from the project in the aggregate amount of $1,000,000. Such distribution
is payable from available cash flows in nine annual installments together
with interest at 12% per year, which were scheduled to begin in May 1995.
The ultimate ability of the project to meet its payment obligations to the
Trust is dependent on the actual operating performance of the Stillwater
Project, which, in turn, is largely dependent upon water levels in the
Hudson River. Since 1995, water levels in the Hudson River basin have
frequently been below normal. As a result of the low water levels, the
operating results of the project were insufficient to meet its debt
payments, and accordingly, no distributions were made to the Trust since
1994.
As a result, all available cash flow from the Stillwater Project is being
applied to meet debt service requirements. Until water flows return to
expected levels, repairs are completed and the current arrears in debt
servicing are paid, it appears likely that most, if not all, of the
payments due to the Trust will be carried forward, with interest, into
subsequent years.
Due to uncertainty surrounding the timing of payments to the Trust, in 1997
the Trust wrote down its investment in the Stillwater Project to the net
present value of anticipated payments and recorded a loss of $400,000. At
December 31, 1999 and 1998, the Trust's net investment in the Stillwater
Project was $600,000.
4. Transactions With Managing Shareholder and Affiliates
Prior to the BDC election, the Partnership also paid to the general
partners a distribution and offering fee in an amount up to 2.5% of each
capital contribution made to the Partnership. This fee was intended for
legal, accounting, consulting, filing, printing, distribution, selling, and
closing costs for the offering of the Partnership. These fees were recorded
as a reduction in the partners' capital contributions.
Prior to the BDC election in July 1994, the Partnership paid to the general
partners a management fee not to exceed 4.5% of each capital contribution
made to the Partnership. The fee was payable to the general partners for
their services in investigating and evaluating investment opportunities and
effecting transactions for investing the capital of the Partnership.
Prior to the BDC election, the Partnership paid to the general partners an
annual administrative and overhead fee equal to 1% of the aggregate capital
contributions of the Partnership.
(F9)
<PAGE>
On June 15, 1994, the Trust entered into a management agreement with the
managing shareholder, under which the managing shareholder renders certain
management, administrative and advisory services and provides office space
and other facilities to the Trust. As compensation to the managing
shareholder, the Trust pays the managing shareholder an annual management
fee equal to 1% of the net assets of the Trust payable monthly. During
1999, 1998 and 1997, the Trust paid management fees to the managing
shareholder of $76,331, $69,931 and $67,483, respectively.
Under the Declaration of Trust, the managing shareholder is entitled to
receive each year 1% of all distributions made by the Trust (other than
those derived from the disposition of Trust property) until the
shareholders have been distributed a cumulative amount equal to 15% per
annum of their equity contribution. Thereafter, the managing shareholder is
entitled to receive 20% of the distributions for the remainder of the year.
The managing shareholder is entitled to receive 1% of the proceeds from
dispositions of Trust properties until the shareholders have received
cumulative distributions equal to their original investment ("Payout").
After Payout, the managing shareholder is entitled to receive 20% of all
remaining distributions of the Trust.
The managing shareholder and affiliates own, in the aggregate, 3.0 shares
of the Trust with a cost of $273,000.
In connection with the construction of the waste oil facility at the
Lynchburg Project, the managing shareholder advanced $570,057 in 1995 and
$259,350 in 1996 to the Trust to fund a portion of the Trust's investment
in the waste oil facility. No interest was charged on the advances. When
the Trust received the settlement proceeds described in Note 3 -
Investments in Power Generation Limited Partnerships in January 1997, all
of the outstanding advances were repaid to the managing shareholder without
interest.
In 1996, under an Operating Agreement with the Trust, Ridgewood Power
Management LLC ("Ridgewood Management", formerly Ridgewood Power Management
Corporation), an entity related to the managing shareholder through common
ownership, provides management, purchasing, engineering, planning and
administrative services to the Lynchburg Project. Ridgewood Management
charges the project at its cost for these services and for the allocable
amount of certain overhead items. Allocations of costs are on the basis of
identifiable direct costs or in proportion to amounts invested in projects
managed by Ridgewood Management. During the year ended December 31, 1997,
Ridgewood Management charged the Lynchburg Project $78,275 for overhead
items allocated in proportion to the amount invested in projects managed,
and charged the Lynchburg Project for all of the remaining direct operating
and non-operating expenses incurred during the period. During the year
ended December 31, 1999 and 1998 and the seven month period ended December
31, 1997, Ridgewood Management charged the Olinda Project $163,480,
$128,257 and $30,382, respectively, for overhead items allocated in
proportion to the amount invested in projects managed. Ridgewood Management
also charged the Olinda Project for all of the remaining direct operating
and non-operating expenses incurred during the period.
5. Revolving Line of Credit Facility
On June 6, 1997, the Brea Partnership entered into a revolving credit
agreement with its principal bank whereby the Bank provided a five year
committed line of credit facility of $750,000 which decreases by $100,000
on each anniversary of the facility. The Trust guaranteed the obligations
of the Brea Partnership under the credit facility. Outstanding borrowings
bear interest at the Bank's prime rate or, at the Brea Partnership's
choice, at LIBOR plus 2.5%. At December 31, 1999 and 1998, there were no
borrowings outstanding under the credit facility.
(F10)
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
EXHIBIT 24 -- POWERS OF ATTORNEY
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, John Belknap,
appoints Robert E. Swanson and Martin V. Quinn, and each of them, as his true
and lawful attorneys-in-fact with full power to act and do all things necessary,
advisable or appropriate, in their discretion, to execute on his behalf as an
Independent Trustee of Ridgewood Electric Power Trust I and of Ridgewood
Electric Power Trust IV, the Annual Reports on Form 10-K for the year ended
December 31, 1999 for each of the above-named trusts, and all amendments or
documents relating thereto.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of March, 2000, at Fort Lauderdale, Florida.
/s/John Belknap
John Belknap
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, Richard
Propper, M.D., appoints Robert E. Swanson and Martin V. Quinn, and each of them,
as his true and lawful attorneys-in-fact with full power to act and do all
things necessary, advisable or appropriate, in their discretion, to execute on
his behalf as an Independent Trustee of Ridgewood Electric Power Trust I and of
Ridgewood Electric Power Trust IV, the Annual Reports on Form 10-K for the year
ended December 31, 1999 for each of the above-named trusts, and all amendments
or documents relating thereto.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of March, 2000, at Fort Lauderdale, Florida.
/s/Richard Propper, M.D.
Richard Propper, M.D.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, Seymour Robin,
appoints Robert E. Swanson and Martin V. Quinn, and each of them, as his true
and lawful attorneys-in-fact with full power to act and do all things necessary,
advisable or appropriate, in their discretion, to execute on his behalf as an
Independent Trustee of Ridgewood Electric Power Trust I and of Ridgewood
Electric Power Trust IV, the Annual Reports on Form 10-K for the year ended
December 31, 1999 for each of the above-named trusts, and all amendments or
documents relating thereto.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 18th day of March, 2000, at Fort Lauderdale, Florida.
/s/Seymour Robin
Seymour Robin
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's unaudited interim financial statements for the year ended December
31, 1999 and is qualified in its entirety by reference to those financial
statements.
</LEGEND>
<CIK> 0000924386
<NAME> RIDGEWOOD ELECTRIC POWER TRUST I
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,142,009
<SECURITIES> 6,583,781<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,183,064
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,766,845
<CURRENT-LIABILITIES> 111,343<F2>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 7,655,502<F3>
<TOTAL-LIABILITY-AND-EQUITY> 7,766,845
<SALES> 0
<TOTAL-REVENUES> 1,919,976
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 586,515
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,333,461
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,333,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,333,461
<EPS-BASIC> 12,639
<EPS-DILUTED> 12,639
<FN>
<F1>Investments in power project partnerships.
<F2>Includes $50,227 due to affiliates.
<F3>Represents Investor Shares of beneficial interest
in Trust with capital accounts of $7,669,106 less
managing shareholder's accumulated deficit of $13,604.
</FN>
</TABLE>
